New Brunswick prices; CNH starts roadshow for ABS; Canadian high-yield paper cheapens

By Cristal Cody

Prospect News, Oct. 11 - Canada's positive market tone at the open on Tuesday helped bring one issuer to price a bond deal.

The Province of New Brunswick raised C$300 million in new 10-year notes.

"Market tone was relatively decent today. Provincial spreads are tightening by another basis point on the day, so it allowed New Brunswick to come into the market," a bond source said.

The bond markets in Canada and the United States were closed on Monday, while equity markets were open and stocks rallied on the day but gave back some gains going out Tuesday.

Market tone dependent, "there's a number of provinces that would look to issue," a source said. "Provinces have been able to more regularly tap the markets, even volatile markets. In the last couple of months, we've seen more provincial issuance than corporate issuance as investors look for higher quality product."

One corporate issuer plans to sell asset-backed securities in the week ahead. CNH Global NV launched a roadshow in Toronto for an offering of asset-backed securities.

A couple of other corporate deals also may be in the pipeline this week, while provincial issuance could remain steady the rest of the week, a source said.

Canada's corporate high-yield bond market weakened the previous week with spreads wider by nearly 30 basis points, though Canadian dollar yields remain attractive compared to U.S. high-yield bond yields, a trader said.

Some names such as Connacher Oil & Gas Ltd., Precision Drilling Corp. and Ford Credit Canada Ltd. have Canadian dollar bonds trading cheaper than the U.S. counterparts.

Calgary, Alta.-based Connacher Oil & Gas' Canadian dollar 8.75% notes due 2019 are trading at 69.5, compared to the company's U.S. dollar 8.5% notes due 2019, which were seen at 72, the trader said.

Ford Credit's Canadian dollar 4.875% notes due 2014 were quoted at 99 versus Ford Credit's U.S. dollar 8% notes due 2014, seen at 106.25. The issuer is the Canadian finance arm of Ford Motor Co.

Government bonds ended slightly slower on the mid to long end of the yield curve as European leaders work to solve the debt crisis. Canada's 10-year note yield rose 1 bp to 2.29%. The 30-year bond yield rose 2 bps to 2.87%.

New Brunswick taps market

In its new bond issuance, the Province of New Brunswick (Aa2/AA-//DBRS: A) priced C$300 million 3.35% 10-year notes at 99.824 to yield 3.371% on Tuesday, a bond source said.

The notes due Dec. 2, 2021 came at a spread of 107.5 bps over the Government of Canada benchmark.

CIBC World Markets Inc. was the lead manager.

The province last was in the market with a fixed-rate bond issue on Feb. 1, 2011, when it sold C$465 million in a reopening of its 10-year and 30-year benchmark issues.

Case New Holland on roadshow

CNH Global launched a roadshow in Toronto on Tuesday for a Canadian sale of tractor loan asset-backed securities, a bond source said.

The roadshow continues in Montreal on Wednesday, Winnipeg on Thursday and Vancouver, B.C., on Friday.

BMO Capital Markets Corp. is the manager.

The deal is expected to price the week of Oct. 17.

Case New Holland is an agricultural and construction equipment manufacturer based in Amsterdam and is a subsidiary of Fiat Industrial SpA.

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