John Deere Credit upsizes deal; market tone improves; Kinross Gold bonds widen

By Cristal Cody

Prospect News, Oct. 6 - Market tone improved as global equities rallied after European Central Bank officials eased overseas banking fears and left their benchmark rate unchanged at 1.5%, giving a window for one corporate issuer to tap the Canadian bond markets.

John Deere Credit Inc. priced an upsized C$200 million offering of three-year notes.

The deal came "tighter than indication," an informed bond source said. "Clearly, it was a good day today and this was very well received."

No issues are expected on Friday ahead of the early market close and September jobs data due in Canada and the United States, sources said. The Canadian bond markets will be closed along with U.S. markets on Monday.

Corporate bonds ended tighter on the day. The Markit CDX Series 17 North American high-grade index firmed 6 basis points to a spread of 139 bps.

In the secondary market, Kinross Gold Corp.'s 10-year notes traded 85 bps wider since they priced in August as gold prices slumped, a trader said Thursday.

Government bonds were lower across the curve as stocks rose. The 10-year note yield rose to 2.22% from 2.14%. The yield on Canada's 30-year bond climbed 7 bps to 2.8%.

In the day's economic data, Statistics Canada said building permits fell a second straight month, falling in August by 10.4% to a seasonally adjusted C$5.9 billion.

John Deere Credit prices

In Canada's primary market, John Deere Credit (A2/A//DBRS: A) sold an upsized C$200 million of three-year notes at par to yield 2.25% on Thursday, an informed bond source said.

The deal was upsized from C$150 million.

The 2.5% notes due Oct. 14, 2014 priced at a spread of 109 bps over the Canadian bond curve, compared to price talk of 110 bps over the curve.

RBC Capital Markets Corp. and TD Securities Inc. were the lead managers.

The Burlington, Ont.-based equipment financing and leasing company is a unit of Deere & Co.

Kinross Gold cheapens

Kinross Gold's high-grade senior notes (Baa3/BBB-/BBB-) moved out in trading on Thursday, a trader said.

The 5.125% notes due 2021 were seen early in the day at 375 bps bid, 355 bps offered. The company sold $500 million of the notes on Aug. 16 at a spread of 290 bps over Treasuries.

The mining and gold ore processing company is based in Toronto.

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