Primary quiets; Capital Power trades lower; Debt from Connacher Oil, Newalta trades up

By Cristal Cody

Prospect News, Nov. 18 - Canadian bond markets ended mostly quiet on Friday with no primary activity seen, bond sources said.

"It seems to have settled down from the last couple of days," one bond source said.

The week saw corporate bond deals from GE Capital Canada Funding Co., Veresen Inc., Manufacturers Life Insurance Co. and 407 International Inc., along with a utility deal from Toronto Hydro Corp.

Bonds traded mostly flat on Friday in light trading. The Markit CDX Series 17 North American high-grade index closed the day unchanged at a spread of 136 basis points.

In the high-yield secondary market, Connacher Oil & Gas Ltd.'s bonds traded up 3 to 5 points on the week, a source said.

New debt sold earlier in the moth from Newalta Corp. and Ford Credit Canada Ltd. also traded higher.

Capital Power Income LP's bonds ended the week lower after the company was downgraded to high-yield status on Wednesday.

Government bonds moved lower on more optimism with the European financial crisis on Friday and domestic economic data, with yields up 1 basis point across the curve. Canada's 10-year note yield rose 1 bp to 2.12%. The 30-year bond yield ended up 1 bp at 2.74%.

Statistics Canada said consumer prices rose 2.9% in October, following a 3.2% rise in September. Bank of Canada's core consumer price index rose 2.1% in October, up from a 2.2% gain in September.

Connacher Oil better

Connacher Oil's 8¾% notes due 2018 are trading better with the Canadian and U.S. bonds up 3 to 5 points on the week, a source said.

The Canadian-dollar notes were quoted Friday at 74.5 bid.

Connacher Oil sold the C$350 million tranche of notes due Aug. 1, 2018 at par on May 20.

The integrated oil company is based in Calgary, Alta.

Newalta holds

In other trading, Newalta's 7¾% senior debentures due Nov. 14, 2019 were seen Friday at 101 bid, a source said.

The company sold C$125 million of the debentures (B1/DBRS: BB) at par on Nov. 8.

Newalta is a Calgary, Alta.-based industrial waste management and environmental services company.

Ford Credit Canada edges up

The bonds that Ford Credit Canada sold earlier in the month also trader better. The 4.2% senior notes due Nov. 14, 2013 were quoted at 101.15 on Friday, a trader said.

Ford Credit Canada (Ba1/BB+/DBRS: BB) priced C$450 million of the two-year senior notes at 99.949 to yield 4.227% on Nov. 8.

The company is a financing arm of the Ford Motor Co.

Capital Power lower

Capital Power Income's 5.276% notes due November 2020 were quoted Friday at 60 bid, 62 offered in the secondary market, a trader said.

The bonds were seen on Wednesday at 61 bid, 63 offered.

DBRS announced on Wednesday that it downgraded Capital Power Income's senior debt and medium-term notes to BB from BBB after the Canadian power company's takeover by Boston-based Atlantic Power Corp. closed the previous week.

Capital Power Income sold C$300 million of the 10-year notes at par on Nov. 9, 2010.

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