Canada Housing sells mortgage bonds; Desjardins prices $1 billion; Viterra trades upward

By Cristal Cody

Prospect News, March 17 - Canada Housing Trust and Caisse Centrale Desjardins du Quebec were in the Canadian and U.S. bond markets on Thursday with deals, sources said.

Otherwise, the primary calendar is expected to remain light through the spring break holiday in Canada.

In trading, high-yield bonds were mostly flat on Thursday, although Viterra Inc.'s bonds traded higher, sources said.

OPTI Canada Inc. was also busy and higher following a monthly production report that came out on Wednesday.

In economic data, Statistics Canada said Thursday that international investors bought C$13.3 billion of Canadian securities in January, led by $10.1 billion of bond purchases.

Federal government bonds, mostly two-year Government of Canada benchmark bonds, accounted for just over half of the purchases in January, the agency said.

Non-residents also purchased private corporate and government enterprise bonds as well as bought C$1.8 billion of provincial bonds in January, mainly new U.S. dollar-denominated short-term bonds, Statistics Canada said.

In other data, wholesale sales rose 1.5% in January to C$46.7 billion, Statistic Canada said.

Canadian government bonds were mostly down in line with U.S. Treasuries. The 10-year bond yield rose to 3.19% from 3.14%, while the 30-year bond yield rose 4 basis points to 3.72%.

U.S. Treasuries gave back some on Thursday, sending yields up. The benchmark 10-year note yield rose 5 bps to 3.25%, and the 30-year bond yield also rose 5 bps to 4.43%.

"Over the course of the weekend, everybody ran for the hills. We have a big sell-off today, where rates are ending the day down," said Dan Greenhaus, market strategist at Miller Tabak & Co. "The 10-year is still down 15 basis points or so for the week."

Canada Housing sells bonds

Canada Housing Trust, a unit of Canada Mortgage and Housing Corp., priced C$6.25 billion 2.75% mortgage bonds due June 15, 2016 at 99.881 to yield 2.775% on Thursday, a source said.

The bonds (Aaa/AAA/DBRS: AAA) priced at a spread of 26.5 bps over the Government of Canada benchmark. The notes were talked in the area of 26.5 bps to 27 bps.

RBC Capital Markets Corp. was the lead manager.

BMO Capital Markets Corp., TD Securities Inc. and CIBC World Markets Inc. were the co-managers.

The mortgage bonds were sold in Canada and under Rule 144A.

Canada Mortgage and Housing offers financing, mortgage loan insurance, mortgage-backed securities and other programs.

Desjardins prices $1 billion

Caisse Centrale Desjardins du Quebec sold $1 billion of 2.55% five-year covered bonds on Thursday to yield Treasuries plus 68.85 bps, or mid-swaps plus 45 bps, a source said ahead of the market close.

The Rule 144A bonds were sold at the tight end of guidance, which was in the range of mid-swaps plus 45 bps to 47 bps.

The bonds (Aaa/AAA/AAA) priced at 99.855 to yield 2.581%. They are non-callable.

Barclays Capital Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co., Inc. and RBS Securities Inc. were the bookrunners.

The treasury arm of the Desjardins Group is based in Montreal.

Viterra's notes strengthen

Viterra's notes were stronger in early secondary trading, a source said.

The 8.5% notes due 2017 traded up to 110 bid, 111 offered on Thursday from 109.5 bid, 110 offered the previous day.

The company's 8.5% notes due 2014 also were higher at 108.75 bid, 109.75 offered, compared to 108.5 bid, 109.5 offered on Wednesday.

The company's most recent issue, the 6.406% senior notes due 2021, traded flat Thursday at 102.5 bid, 103.5 offered, a source said. Viterra sold the notes on Feb. 10 at par.

Regina, Sask.-based Viterra provides agricultural ingredients to global food manufacturers.

OPTI still busy, higher

OPTI Canada's bonds were "reasonably busy again," a trader said.

He called the 7.875% and 8.25% subordinated notes due 2014 up 1 to 1.5 points at 51.5 bid, 52.5 offered. The 9% senior notes due 2012 were at 100.25 bid, 100.5 offered and the 9.75% notes due 2013 at 99 bid, 99.5 offered.

At another shop, a trader said OPTI subs were trading at 51.5 bid, 52 offered.

"They were trading with a 51 handle yesterday, so it's probably not all that changed," he said.

On Wednesday, the Calgary, Alta.-based oil-sands producer issued its monthly production report for February. Bitumen production at the Long Lake oil-sands project fell to 23,100 barrels per day in February, due in part to a 10-day maintenance shutdown. The company had reported production of 27,000 barrels per day in January.

The project - with partner Nexen Inc. - has continued to produce at lower-than-expected levels, due mostly to operational problems. OPTI and Nexen have yet to produce at capacity, which is 72,000 barrels per day.

OPTI is attempting to sort out its balance sheet and has said several times that its financial health depends heavily on ramping up production at Long Lake.

Andrea Heisinger and 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.