Ford Credit Canada bonds trade flat; BMO, bank paper tightens; Ontario, provincials firm

By Cristal Cody

Prospect News, Jan. 3 - Canadian corporate bond market activity slowed on Thursday compared to Wednesday's session but continued to see "better buying," a source said.

Canadian bank and financial paper traded unchanged on the day but financials have come in 5 basis points to 7 bps since late December, according to a trader.

"Everything's significantly tighter," the trader said. "From yesterday they were significantly tighter just after the fiscal cliff announcement, as it was interpreted as positive news and spreads tightened on the back of that."

Bank of Montreal's 2.24% deposit notes due 2017 are trading about 7 bps better since the end of December.

New issue activity is expected to be limited until the upcoming week when desks are fully staffed, sources said.

"It's quiet today but the market's liquid," one bond source said. "It's definitely got some good activity going for what's still a fairly quiet week with some people on holiday."

In other secondary trading, Ford Credit Canada Ltd.'s bonds were unchanged on the day, a trader said.

Ford Motor Co. brought a $2 billion 30-year bond offering in the U.S. high-grade market on Thursday.

"It didn't impact our spread in the Ford name today," a trader said.

The Markit CDX Series 19 North American investment-grade index eased 1 bp to a spread of 86 bps.

The Markit CDX Series 19 North American high-yield index fell to 102.37 from 102.59.

In the provincial secondary markets, the Province of Ontario's 3.5% debentures due 2043 that were reopened on Wednesday traded tighter along with other provincial bonds, an informed source said.

Ontario's debentures closed 2 bps tighter on Thursday.

"Ten-year provincials are tighter by probably another basis point, so things are in good shape," the source said.

The Province of Quebec's bonds also are better and are "outperforming Ontario by 1 to 2 basis points or so in the last three weeks," the source said.

On Friday, the markets are expected to be focused on the U.S. Labor Department's monthly job report, sources said.

Government bonds traded lower on Thursday, tracking U.S. Treasuries. Canada's 10-year note yield rose 6 bps to 1.93%. The 30-year bond yield closed up 5 bps at 2.48%.

Bank of Montreal firms

Bank of Montreal's 2.24% deposit notes due 2017 were seen in the secondary market on Thursday at 89 bps bid, 85 bps offered, tighter than where they traded in late December in the 94 bps, 92 bps area, a source said.

Bank of Montreal (Aa2/A+/DBRS: AA) sold C$1.5 billion of the five-year deposit notes at a spread of 99.9 bps over the Government of Canada benchmark on Dec. 6.

The financial services company is based in Toronto and Montreal.

Ford Credit Canada unchanged

Ford Credit Canada's 3.32% senior notes due Dec. 19, 2017 traded flat in the low 200 bps area, a trader said.

The Canadian financing arm of Ford Motor Co. sold C$750 million of the notes (Baa3/BB+/DBRS: BBB) at a spread of 202 bps over the Government of Canada benchmark on Dec. 12.

Ontario firms

In the provincial markets, Ontario's 3.5% debentures due 2043 traded going out on Thursday at 99 bps, a source said.

The Province of Ontario (Aa2/AA-/DBRS: AA) sold C$600 million with C$500 million placed on behalf of the syndicate at the same terms in a reopening on Wednesday at a spread of 101 bps over the Government of Canada benchmark.

The debentures closed at 100 bps in secondary trading on Wednesday, the source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.