Canadian secondary bond trading active amid limited new supply; PTTEP Canada prices notes

By Stephanie N. Rotondo

Portland, Ore. March 29 - A lack of new issuance in the Canadian debt markets gave way to one trader opining that it was "all quiet on the Canadian front" on Tuesday.

"It's fairly quiet; we're heading into month-end," said another source.

However, the new issue calendar is expected to ramp up once April hits and many investors were posturing ahead of time, sources reported.

One market source also noted that Canadian government bonds were "following U.S. Treasury prices lower," as risk markets gain strength.

The source also remarked that a recent auction of U.S. Treasuries did "poorly," further pressuring the Canadian market.

Secondary trading active

A trader said trading in the corporate Canadian debt market was "heavy" on Tuesday, "particularly in the BBB space."

He said that "bid wanted" lists had begun circulating, as investors were "looking to make room for pending supply."

Even the insurance sector - which has been rallying since last fall, the trader said - was experiencing a bit of a sell-off, as new issues from the insurance space are expected to be upcoming.

He added that insurance has been one of the "best performing" sectors in Canada thus far this year.

PTTEP Canada prices

In the investment-grade primary market, PTT Exploration and Production Canada sold $700 million notes due April 5, 2021 (Baa1/BBB+/) at par to yield 5.692%, or Treasuries plus 225 basis points, a market source said.

The notes priced at the tight end of talk, which was set at the Treasuries plus 235 bps area.

Barclays Capital was the bookrunner for the Rule 144A and Regulation S transaction.

PTTEP Canada is part of PTT Exploration and Production PCL, a Bangkok-based petroleum exploration and production company.

Christine Van Dusen contributed to this story

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