Ford Credit Canada, Plenary to sell bonds; high-yield primary quiet; market under pressure

By Cristal Cody

Prospect News, Sept. 12 - Canada's primary bond market woke up with another deal in the works for the week ahead, bond sources said Monday.

Ford Credit Canada Ltd. intends to sell C$534.61 million in six tranches of asset-backed notes through the Ford Auto Securitization Trust, according to sources.

Also coming up, the market will closely watch the offering from Plenary Health Care Partnerships Humber LP, which held a roadshow on Monday in Montreal for more than C$1 billion in three tranches of bonds (/A/DBRS: A), according to sources.

Guidance on Plenary Health's deal is expected to be given on Tuesday with pricing scheduled later in the week, a source said.

"People do like T3 deals. We're anxiously watching to see how this one goes because of the long-dated tranches," the source said. "We're anxious to see how investor demand for long credit will be. We suspect there might still be extra yield that long credit will bring."

Plenary Health's sale includes one tranche of five-year notes and two tranches of long-dated bonds.

In Canada's high-yield bond market, no immediate primary activity is on tap, a source said.

The markets were volatile on Monday with European equities dropping on fears of a Greek debt default.

"Spreads are still very, very illiquid," a source said. "Trades were being done, but most of it is on the selling side. There's still a selling bias, which is going to put pressure on spreads."

Bank bonds opened the week weaker, the source said.

High-yield bonds in Canada ended Monday "unchanged to down a tad today," another bond source said, noting "not very much flow."

Government bonds weakened on the short end of the curve, sending yields up. Canada's two-year note yield rose 8 basis points to 0.88% The 10-year note yield rose 5 bps to 2.14%, while the 30-year bond yield edged up 1 bp to 2.81%.

Statistics Canada said Monday that foreign investors purchased more Canadian securities in the second quarter.

"Foreign investment in Canadian securities again focused on bonds in the second quarter, with purchases of C$11.9 billion," the agency said.

Asset-backeds on tap

Deal details emerged on the offering from Ford Credit Canada, which will sell C$534.61 million in six tranches of asset-backed notes through the Ford Auto Securitization Trust, according to sources.

The offering includes C$172 million of series 2011R2 class A1 notes (DBRS: AAA) due Aug. 15, 2013; C$206 million of series 2011R3 class A2 notes (DBRS: AAA) due July 5, 2015; C$119.93 million of series 2011R2 class A3 notes (DBRS: AAA) due Nov. 15, 2016; C$15.72 million of series 2011R3 class B notes (DBRS: AA) due March 15, 2017; C$10.48 million of series 2011R3 class C notes (DBRS: A) due June 15, 2017 and C$10.48 million of series 2011R3 class D notes (DBRS: BBB) due March 15, 2018.

CIBC World Markets Inc., HSBC Securities (Canada) Inc., RBC Capital Markets Corp., BMO Capital Markets Corp. and TD Securities Inc. are the managers.

Ford Motor Co. is the performance guarantor.

Proceeds will be used to finance the purchase of retail conditional sale contracts secured by new and used vehicles.

Pricing is expected later in the week.

The issuer is the Canadian finance arm of the Ford Motor Co.

Plenary Health ahead

Guidance is expected to be released on Tuesday for the previously announced offering from Plenary Health Care Partnerships Humber. The company held a roadshow on Monday for the sale of three tranches of bonds (/A/DBRS: A), according to sources.

According to the recent presale report by DBRS, the deal includes C$482.089 million of short-term senior bonds due Aug. 14, 2016 and C$373.473 million of series A long-term senior bonds due May 31, 2039 and C$149.01 million of series B long-term senior bonds due Nov. 30, 2044.

RBC Capital Markets Corp. is the lead manager.

Plenary Health Care Partnerships is an entity created to design, build, finance and maintain a new 1.7 million square foot hospital in Toronto.

Catalyst flat

A trader said that Catalyst Paper Corp.'s 11% senior secured notes due 2016 were "pretty much unchanged" in a 661/2-68 range on Monday, with "not a lot of quotes in those."

The trader saw the Richmond, B.C.-based company's 7 3/8% notes due 2014 "quoted lower, but no trades," in a 25-27 context.

Paul Deckelman contributed to this review

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