'Decent buying' in secondary markets ahead of holiday; RBC, Ford Credit Canada tighten

By Cristal Cody

Prospect News, Dec. 21 - Year-end buying kept the Canadian secondary bond markets active in pre-holiday trading on Friday, sources said.

"It's definitely much lighter than earlier in the week, but we still are seeing some decent buying," a bond source said. "People [are] just squaring up positions, given they don't expect much to do next week."

Bonds overall widened in thin trading, according to sources.

"It's definitely much slower," one source said. "We saw a lot of people coming in and buying into the holiday season."

The Markit CDX Series 18 North American investment-grade index eased 4 basis points to a spread of 93 bps.

The Markit CDX Series 18 North American high-yield index fell to 101.12 from 101.90.

"It just seems that toward the end of the week, there's much less volume and less liquidity; it's wiped out a little bit here," a source said. "Overall, financials have been outperforming lately, subdebt in particular."

The Royal Bank of Canada's 2.99% subordinated debentures due 2024 traded about 2 bps better on the week and 15 bps better since the deal priced at the start of the month, a trader said.

Ford Credit Canada Ltd.'s 3.32% senior notes due 2017 are 2 bps to 3 bps tighter since the deal priced a week ago.

"There's a little bit of interest in the Ford name," a trader said.

High-yield secondary activity on Friday was "completely quiet," one trader said.

Athabasca Oil Corp.'s 7½% senior secured second-lien notes due 2017 traded mostly unchanged.

Canadian government bonds traded higher in line with Treasuries. Canada's 10-year note yield closed down 4 bps at 1.80%. The 30-year bond yield fell to 2.37% from 2.41%.

Ford Credit Canada better

Ford Credit Canada's 3.32% senior notes due 2017 firmed to 198 bps bid, 197 bps offered on Friday in trading, a bond source said.

The Ford Motor Co.'s Canadian financing arm sold C$750 million of the five-year senior notes (Baa3/BB+/DBRS: BBB) at a spread of 202 bps over the Government of Canada benchmark.

Royal Bank of Canada tightens

Royal Bank of Canada's 2.99% subordinated debentures due 2024 traded better at 135 bps bid, 130 bps offered on Friday, a trader said.

The bank (A1/A/DBRS: AA) sold C$2 billion of the subordinated debentures on Dec. 3 at a spread of 150 bps over the Government of Canada benchmark.

The financial services company is based in Toronto.

Athabasca flat

In other trading, Athabasca Oil's 7½% senior secured second-lien notes due 2017 went out Friday at par bid, 101 offered, a trader said.

The company sold C$550 million of the five-year notes (/B/DBRS: B) at par on Nov. 9.

Athabasca Oil is a Calgary, Alta.-based based oil sands developer.

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