Market activity light in half-day session ahead of Canadian Thanksgiving; Quebecor flat

By Cristal Cody

Prospect News, Oct. 5 - Canadian bond markets closed early on Friday ahead of the long holiday weekend with light trading and no new issuance, bond sources said.

"Today was a half day, so it was very quiet," one bond source said. "Everything's kind of slow."

The bond markets will be closed on Monday for the Canadian Thanksgiving Day holiday.

Primary activity for the short week ahead is hit-and-miss.

"Hard to tell at this point, it's a long weekend," a high-grade bond source said.

One small offering of C$55 million of debentures (Aa2) may be in the works from CHU Sainte-Justine, a Montreal-based hospital in the Province of Quebec. Additional deal information was not immediately available.

Looking ahead, issuance also is expected from Ontario-based Just Energy Group Inc., which filed a C$1 billion base shelf prospectus that includes senior or subordinated debt securities and preferred shares.

Secondary trading on Friday was light on the short day.

Quebecor Media Inc.'s Canadian notes that priced earlier in the week traded unchanged in the high-yield market on Friday after it gained nearly 2 points the previous day.

"It's been quiet," a high-yield bond source said. "We closed the books at 1 o'clock and there wasn't a lot going on just because it's a holiday."

In the U.S. market, Canadian paper from Bank of Montreal was flat to weaker, while Toronto-Dominion Bank and National Bank of Canada traded better.

The Markit CDX Series 18 North American investment-grade index ended unchanged at a spread of 95 basis points.

The Markit CDX Series 18 North American high-yield index inched up to 100.68 from 100.64.

On Friday, Canadian employment data along with the U.S. unemployment rate came in better than expected.

Statistics Canada said employment rose by 52,000 in September, better than the 10,000 forecast.

The unemployment rate rose 0.1% to 7.4%.

In other economic data, Canadian building permits climbed 7.9% in August, compared to a 2.8% decline in July, Statistics Canada said.

Government bonds ended lower with yields up as safe-haven bidding fell on the stronger employment data.

Canada's 10-year note yield closed 5 bps higher at 1.81%. The 30-year bond yield rose 4 bps to 2.4%.

Quebecor unchanged

Quebecor Media's 6 5/8% notes due 2023 went out unchanged in the half-day session on Friday at 101.75 bid, 102.25 offered, a bond source said.

The company sold C$500 million of the notes (B2/B+) on Wednesday at par.

The communications and media company is based in Montreal.

TD Bank better

In the financial sector, Toronto-Dominion Bank's 2.375% notes due 2016 firmed 1 bp to 35 bps on Friday, according to a bond source.

TD Bank sold $600 million of the notes (Aaa/AA-) in a reopening on Nov. 3, 2011 at 117 bps over Treasuries.

The bank and financial services company is based in Toronto.

BMO flat

Bank of Montreal's 2.5% notes due 2017 traded 2 bps wider at 59 bps on Friday, a market source said.

The bank sold $1.5 billion of the notes (Aa2/A+) on Jan. 6, 2012 at a spread of 170 bps over Treasuries.

The financial services company is based in Toronto and Montreal.

National Bank of Canada gains

Stronger on the day, National Bank of Canada's 2.2% notes due 2016 (Aaa) firmed 3 bps to 31 bps in trading on Friday, according to a bond source.

The bank sold $600 million in a reopening of the notes on Feb. 6, 2012 at a spread of 67 bps over Treasuries. The issue originally priced on Oct. 12, 2011 in a $1.4 billion offering at Treasuries plus 104.5 bps.

The financial services company is based in Montreal.

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