Ford Auto Trust sells asset-backed notes; deal supply dries on unrest; oil, gas bonds firm

By Cristal Cody

Prospect News, Feb. 24 - Ford Auto Securitization Trust, a unit of Ford Credit Canada Ltd., sold C$533.49 million of series 2011-R1 senior and subordinated asset-backed notes (DBRS: AAA) on Thursday, sources said.

Although oil and gas bonds have not been as affected in Canada, the Middle East and North Africa turmoil and oil price hikes may be causing some issuers to rethink bringing deals this week, a source said.

NAL Energy Corp., a Calgary, Alta.-based oil and gas producer, had planned to sell C$150 million to C$250 million of bonds this week, a source said.

"We think that now the oil and gas deal might have been pulled, so there's not a lot of supply," the source said.

NAL Energy representatives were not immediately available for comment.

Canadian oil and gas bonds stayed mostly unchanged, though up 1 basis point on Thursday, a source said.

U.S. oil and gas bonds have widened during the week on the growing unrest in the Middle East and North Africa. But recent bonds sold from three Calgary, Alta.-based oil and gas producers have performed slightly better, with Baytex the strongest, a source said.

"They have moved up at least a point over the last couple of days, but there's no offer," a source said.

Paramount Resources Ltd.'s 8.25% series 2 senior notes due Dec. 13, 2017 were seen at 103.25, up from the Jan. 28 issue price of 103.00, the source said. Vermilion Energy Inc.'s 6.5% notes due 2016 traded in the afternoon at 102.50. The notes priced at par on Feb. 3.

Also, Baytex Energy Corp.'s senior notes due 2021 (B3/B+) were quoted at 109.75. The 10-year notes priced at par on Feb. 10.

High-yield trading in Canada has been "pretty sleepy" for the week, a source said. "The market in Canada has been pretty stable during the volatile period."

Government paper gains

The flight from riskier assets helped Canadian government bonds mostly move higher with U.S. Treasuries.

The 10-year bond yield fell to 3.319% from 3.29%. The two-year note yield rose 2 basis points to 1.8%.

"The Canadian curve has largely taken the cue from the U.S. curve," said Ian Pollick, portfolio strategist at TD Securities.

"It was definitely a choppy session. Prices were higher, yields lower and we are seeing some flattening in the curve by the long end," he said.

Treasuries were stronger on Thursday, especially on the longer end of the curve, as investors sought safer havens for debt from the turmoil in the Middle East and North Africa. The 10-year note yield fell 3 bps to 3.45%. The 30-year bond yield dropped 4 bps to 4.54%.

Ford Auto Trust prices

Ford Auto Securitization Trust sold C$533.49 million of series 2011-R1 senior and subordinated asset-backed notes (DBRS: AAA) on Thursday, sources said.

The first tranche of C$264.01 million of 1.793% class A1 notes due Nov. 17, 2011 priced at par to yield 1.8%, or a spread of 53.4 bps over the Government of Canada benchmark.

The second tranche of C$134.46 million of 2.431% class A2 notes due March 16, 2013 was sold at par to yield 2.443%. The bonds priced at a spread of 64.7 bps over the government benchmark.

In the last tranche, the trust sold C$135.02 million of 3.02% class A3 notes due June 15, 2014 at par to yield 3.039%, or a spread of 80.8 bps over the government benchmark.

Three smaller tranches of class B, C and D notes were not sold publicly.

The notes, guaranteed by the Ford Motor Credit Co., were sold in Canada and under Rule 144A.

Bank of America Merrill Lynch, HSBC Capital (Canada) Inc., RBC Capital Markets Corp. and Scotia Capital Inc. were the lead managers.

After the sale closes, the trust will acquire a portfolio of retail conditional sale contracts secured by new and used cars, light trucks and utility vehicles from Ford Credit Canada.

OPTI gyrates

Market mainstay OPTI Canada Inc. continued to be active, even without any credit-specific news.

A trader said OPTI's subordinated debt - the 7 7/8% and 8¼% notes due 2014 - "had a huge run up," gaining about 4 points before "giving some back." He pegged the paper around the 55 mark, up from opening levels around 52 and down from the intraday high around 56.

He added that about $70 million to $80 million of the bonds changed hands.

At another desk, OPTI's bonds were deemed "up a couple points," also around that 55 level.

Stephanie N. Rotondo contributed to this review

© 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.