Canada primary calendar stays empty; corporate bonds stable; Viterra notes better in trading

By Cristal Cody

Prospect News, Aug. 30 - Primary activity in the Canadian bond markets is expected to stay flat over the week with the bond markets closing early on Friday ahead of the three-day holiday weekend.

"We haven't had a corporate deal in Canada in two weeks now," a syndicate bond source said. "Don't expect we'll see anything this week. The equity markets have bounced and the bond markets have not."

The last corporate bond offering in Canada was Sun Life Financial Inc.'s C$300 million 4.57% 10-year senior debentures sold on Aug. 17.

"This is usually the slowest week possible for the year, next to Christmas," the source said. "We're hopeful that September will bring some issuers and some buyers."

Quite a lot of issuers "have been waiting for frankly a month when equity markets started to go in the last week of July," the source noted. "That seems to have closed a lot of doors."

Meanwhile, corporate bond spreads stayed steady in secondary trading on Tuesday, bond sources said.

"Spreads are wider but all-ins are still no worse off," a source said. "Today is the best day we've had in a while - it just means things are stable, not that things are starting to tighten."

Higher-rated high-yield bonds were better bid on Tuesday, a trader said.

"There's a little bit of bid to higher-quality double B names," the trader said.

Bonds from Cara Operations Ltd., Videotron Ltd. (Ba1/BB/), Viterra Inc. (Ba1/BBB-/DBRS: BBB) and Precision Drilling Corp. found more "people looking to buy them," the trader said.

Viterra's 6.406% senior notes due Feb. 16, 2021 traded higher on the day.

Still, bond markets mostly were quiet. "Not a whole lot going on," a trader said. "Nobody's around; there's not a lot of trading."

Canadian government bonds were better on the day on weaker domestic and U.S. economic data, pushing yields down across the curve. The 10-year note yield fell 4 basis points to 2.4%. The 30-year bond yield dropped to 3.01% from 3.05%.

Cara flat

Cara Operations' 9 1/8% senior secured second-lien guaranteed notes due Dec. 1, 2015 traded unchanged on Tuesday, though they were more active, a trader said.

The notes (DBRS: B//BB-/) were quoted at 102 bid, 103 offered.

"We traded a small amount," the trader said.

Cara Operations sold the notes in a C$200 million offering on Nov. 24, 2010 at par.

Vaughan, Ont.-based Cara Operations is the largest full-service restaurant operator in Canada.

Viterra up

Viterra's 6.406% senior notes due Feb. 16, 2021 traded "up about a half a point" to the area of 104.5 bid, 105.5 offered on Tuesday, a trader said.

The company sold C$200 million of the notes at par on Feb. 10.

Regina, Sask.-based Viterra provides agricultural ingredients to global food manufacturers.

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