Canadian markets end light deal week; Air Canada, Vermilion lower on first-quarter results

By Cristal Cody

Prospect News, May 4 - Canadian primary activity ended quietly on Friday after a light week of provincial and financial offerings, while bond spreads widened on the day.

In the secondary market, Air Canada Inc.'s Canadian- and U.S. dollar-denominated bonds traded cheaper after the company reported a first-quarter loss, a source said on Friday.

In other high-yield trading, Vermilion Energy Inc.'s bonds edged lower.

High-grade bond spreads widened over the day, sources said. The Markit CDX Series 18 North American investment-grade index eased 3 basis points to a spread of 99 bps.

"Bank and finance were out today," a source said.

Canadian government bonds rallied in line with Treasuries on weaker U.S. jobs data, though volume was light ahead of French and Greek elections on Sunday, sources said.

The U.S. Labor Department reported that the non-farm payroll in April rose by 115,000 jobs, versus a forecast of an extra 160,000 jobs.

Canada's 10-year note yield fell 6 bps to 2.02%. The 30-year bond yield dropped to 2.54% from 2.59%.

Air Canada cheap

Air Canada's senior secured first-lien notes (B2/B+) with call dates later in the year are trading cheaper than other peer airline secured bonds, a bond source said.

Air Canada's Canadian dollar-denominated 10 1/8% senior notes due Aug. 1, 2015 were seen early Friday at 97 bid. The company sold C$300 million of the notes at 99.046 on July 27, 2010.

Air Canada's U.S. dollar-denominated 9¼% senior notes due Aug. 1, 2015 traded at 98 bid on Friday, the source said. Air Canada sold $600 million of the notes at 99.025 on July 27, 2010.

Both issues have a call date on Aug. 1. The 10 1/8% notes have a call price of 107.594, while the 9¼% notes have a call price of 106.938.

Air Canada reported first-quarter operating revenue rose 7.6% to C$2.96 million from the same period a year ago.

The company had a net loss in the quarter of C$210 million versus a net loss of C$19 million in the year-ago period.

The airline is based in Montreal.

Vermilion lower

Vermilion Energy's 6½% senior notes due 2016 traded going out Friday at 104.5 bid, a source said.

The company sold C$225 million of the notes (/BB-/DBRS: BB) at par on Feb. 3, 2011.

Vermilion Energy said on Friday that first-quarter petroleum and natural gas revenue rose to C$296.04 million in the quarter from C$216.53 million in the same period a year ago.

First-quarter earnings jumped to C$65.09 million from C$27.19 million in the same period last year.

Vermilion Energy is a Calgary, Alta.-based oil and gas producer.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.