Quebec sells C$175 million of 90-day bills; Kruger, Noranda drop, Armtec down in trading

By Cristal Cody

Prospect News, Aug. 10 - The Province of Quebec sold C$175 million of three-month treasury bills with no other primary activity seen on Wednesday, bond sources said.

High-grade and high-yield Canadian corporate issuance is expected to stay flat.

There's "nothing on the corporate side," one bond source said. "I don't think investors will be too comfortable; it's probably not going to happen for awhile."

Recently sold high-yield bonds were weaker in Canadian trading on Wednesday, a bond trader said.

Kruger Products LP's 8% seven-year notes sold in July traded down 2 points on Wednesday.

Noranda Operating Trust's new notes also were off in trading since pricing in July but were "well bid," a trader said.

In other trading, Armtec Holdings Ltd.'s six-year notes continued to stay weaker in the secondary market.

Canadian government bonds saw gains on the day, tracking U.S. Treasuries.

"We're seeing a pretty good rally led primarily by the U.S.," a bond source said. "They're not performing as well given the fact we're looking for liquidity above and beyond the U.S."

Canada's 10-year note yield fell to 2.33% from 2.46% on Wednesday.

"Spreads have come in a little bit, reflecting the fact we're looking at a more positive tone for all levels of government," the bond source said.

Quebec sells C$175 million

The Province of Quebec (P-1/A-1+/DBRS: R-1) sold C$175 million of three-month floating-rate treasury bills at an average yield of 0.919% on Wednesday, a bond source said.

The bills due Nov. 10, 2011 priced at an average price of 99.774.

Kruger edges down

Kruger Products' 8% seven-year senior notes (/B/DBRS: BB) were "down 2 points from Friday" in trading on Wednesday, a bond trader said.

The notes were seen at 98 bid, par offered.

The company sold C$175 million of the notes due Aug. 9, 2018 at par on July 28.

Kruger is Canada's leading tissue products producer, with brands that include Cashmere, Purex and Scotties. The company is a subsidiary of Montreal-based pulp and paper producer Kruger Inc.

Light trading in Armtec

Armtec's 8.875% six-year senior notes traded on Wednesday in the mid-70s area, though "nothing's trading," a trader said.

The notes due Sept. 22, 2017 traded on Aug. 2 at 82 bid, 85 offered.

Armtec Holdings priced C$150 million of the seven-year notes on Sept. 15, 2010 at par.

The debt has dropped since Standard & Poor's lowered the company's debt ratings and parent company Armtec Infrastructure Inc. reported lower first-quarter earnings and suspended the quarterly dividend in June. On July 26, DBRS downgraded the company to B from BB.

Armtec is a Guelph, Ont.-based manufacturer and marketer of industrial infrastructure products and engineered construction solutions.

Noranda down

Noranda's senior notes due Dec. 28, 2016 traded on Wednesday at 99.375, a trader said.

The company sold C$90 million of the five-year notes (DBRS: BB) at par to yield 6 7/8% on July 22.

Noranda Operating Trust is owned by Toronto-based Noranda Income Fund and has a 75% interest in Noranda Income LP, which owns the Canadian Electrolytic Zinc metal processing facility in Quebec.

OPTI Canada trades up

A trader said that OPTI Canada, Inc.'s 7 7/8% notes due 2014 were up 2½ points near the end of the day, trading at 63 bid.

There was no fresh news out on the Calgary, Alta.-based oil-sands energy producer, which recently announced that Chinese energy concern Cnooc Ltd. had agreed to buy OPTI for $2.1 billion, subject to approval by the Canadian court currently overseeing OPTI's restructuring and other governmental authorities.

Paul Deckelman contributed to this review

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