Canada Housing Trust to sell C$6.25 billion five-year bonds; Armtec sells bonds at par

By Cristal Cody

Prospect News, Sept. 15 - Canada Housing Trust plans to sell C$6.25 billion in five-year bonds on Thursday, according to a source.

Price talk on the notes is 24.5 basis points over the government of Canada 3% December 2015 bond.

"Pricing should be around noon tomorrow on that issue," the source said.

RBC Capital Markets Corp., Bank of America Merrill Lynch, BMO Capital Markets Corp. and TD Securities Inc. are the joint bookrunners.

Canada Housing Trust is under the umbrella of Canada Mortgage and Housing Corp.

In the market on Wednesday, Armtec Holdings, Ltd. sold C$150 million in seven-year senior unsecured notes (DBRS: BB) on Wednesday at par, a source said.

The 8.875% bonds priced at par to yield 635.4 basis points over the 4% June 2017 government of Canada benchmark bond. The bonds are callable in 2013.

Scotia Capital Inc. and TD Securities Inc. were the joint bookrunners.

Proceeds will be used for general corporate purposes and to repay Armtec group debt.

The Armtec sale was so small it had no impact on the markets, a source said.

Guelph, Ont.-based Armtec manufactures drainage products and engineered solutions for water control.

Elsewhere, the Bank of Canada auctioned C$3 billion in 1.5% two-year government bonds to fair demand at an average yield of 1.556%, said Sheldon Dong, vice president of fixed-income strategy at TD Waterhouse Canada in Toronto.

Economic data was light on the day, with one report showing that Canadian factory sales fell 0.9% in July to C$44.3 billion, according to Statistics Canada.

Canadian bond prices fell on Wednesday as anticipation grows as to whether the Bank of Canada will increase interest rates again. The Bank of Canada increased the benchmark overnight rate by 25 bps to 1% in the previous week.

"There's a lot of uncertainty as far as the Bank of Canada," Dong said. "The market is 50/50 on whether they will raise rates in October or not. The market's in wait-and-see mode."

Canada's 10-year bond yield rose to 2.962% from 2.96%. The two-year bond yield rose to 1.499% from 1.48%.

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