Canadian primary rests; Bank of Nova Scotia weaker in secondary; TD Bank widens

By Cristal Cody

Prospect News, Jan. 30 - The Canadian bond markets traded quietly on Monday with corporate spreads widening out.

The Markit CDX Series 17 North American investment-grade index eased 3 basis points to a spread of 103 bps.

Canadian and U.S. bank and financial paper traded mostly flat on the day.

Royal Bank of Canada's 1.45% notes due 2014 were unchanged at 77 bps over Treasuries in the U.S. market.

Bank of Nova Scotia and Toronto-Dominion Bank shorter-dated notes traded wider.

Government bonds closed better on the long end. The short end of the curve was mostly flat.

Canada's 10-year note yield fell 1 bp to 1.93%. The 30-year bond yield dropped 2 bps to 2.54%.

"Today we're reminded once again that Europe is front and center and has the potential to undermine global growth," a bond source said. "Some expectations are not that elevated for a conclusion."

Major data for the week includes job reports in Canada and the United States on Friday.

"We're focused on payrolls on Friday," a source said. "We're looking for the addition of 25,000 jobs in the month in Canada."

Bank of Nova Scotia weaker

In secondary trading on Monday, Bank of Nova Scotia's 2.55% notes due 2017 widened 10 bps to 155 bps over Treasuries, a bond source said.

The bank sold $1.25 billion of the notes on Jan. 5 at a spread of 172 bps.

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

TD eases

Toronto-Dominion Bank's 1.625% notes due 2016 traded wider at 110 bps from 75 bps on Friday, according to a bond source.

TD sold $3 billion of the 1.625% five-year notes at a spread of mid-swaps plus 44 bps or Treasuries plus 73.4 bps.

The bank and financial services company is based in Toronto.

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