Quebec sells C$500 million in add-on; Scotiabank's 2015s widen 7 bps but firmer on year

By Cristal Cody

Prospect News, Dec. 5 - The Province of Quebec reopened its 3% medium-term notes due Sept. 1, 2023 to sell C$500 million in the Canadian markets on Wednesday, while the corporate bond markets closed the day on a quiet note, informed sources said.

Quebec had been expected to reopen the notes over the week.

The province sold the notes ½ of a basis point tighter than where the issue priced on Friday, a source said.

Otherwise, the day saw little action, sources said.

There was "very little secondary trading," one Canadian investment-grade bond source said, noting "all in all, a very quiet day."

Bonds traded better on the day after holding flat to weaker in the first two sessions of the week. The Markit CDX Series 18 North American investment-grade index firmed 2 basis points to a spread of 98 bps.

The Markit CDX Series 18 North American high-yield index climbed to 100.26 from 99.95.

Canadian U.S. dollar paper was mixed in trading, a market source said.

Bank of Nova Scotia's 1.85% notes due 2015 widened 7 bps on the day but have come in more than 100 bps since the notes priced at the start of the year.

Paper from Bank of Montreal, Toronto-Dominion Bank and National Bank of Canada traded flat.

Royal Bank of Canada's notes firmed 1 bp over the session.

Government bonds closed slightly better. Canada's 10-year note yield fell 1 bp to 1.69%. The 30-year bond yield traded flat at 2.30%.

Quebec reopens notes

The Province of Quebec (Aa2/A+/DBRS: A) sold C$500 million in the reopening it its 3% medium-term notes due Sept. 1, 2023 at 100.143 to yield 2.984%, according to a syndicate source.

The notes priced at a spread of 119 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the bookrunner. Co-managers were CIBC World Markets Inc., Desjardins Securities Inc., BMO Nesbitt Burns Inc., Casgrain & Co. Ltd., TD Securities Inc., RBC Capital Markets, Scotia Capital Inc. and Laurentian Bank Securities, Inc.

The province first sold the notes on Friday in a C$500 million offering at 99.997 to yield 3%, or a spread of 119.5 bps over the Canadian government benchmark.

The total outstanding is C$1 billion.

Scotiabank eases

In secondary trading, Bank of Nova Scotia's 1.85% notes due 2015 (Aa1/AA-/) widened 7 bps on Wednesday to 37 bps bid, a market source said.

The bank sold $1 billion of the notes (Aa1/AA-/) on Jan. 5, 2012 at a spread of 147 bps over Treasuries.

The Canadian bank is based in Halifax, N.S.

RBC firms

Royal Bank of Canada's 1.45% senior notes due 2014 (Aa3/AA-/) firmed 1 bp to 23 bps bid on the day, a market source said.

Royal Bank of Canada sold $1.25 billion of the paper on Oct. 26, 2011 at a spread of Treasuries plus 105 bps.

The financial services company is based in Toronto.

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