Quebec reopens 2041 bonds to add C$500 million; demand grows for long-term provincial debt

By Cristal Cody

Prospect News, Sept. 28 - In the Canadian bond market on Tuesday, the Province of Quebec sold C$500 million bonds in a reopening of an existing issue on Tuesday, a source said.

The 5% bonds due Dec. 1, 2041 priced at 112.378 to yield 4.277%. The bonds priced at a spread of 93.5 basis points over the Canadian government benchmark bond.

National Bank Financial, the investment dealer arm of National Bank of Canada, was the lead manager of the sale.

The deal comes a day after two other Canadian provinces reopened long bond issues.

The Province of British Columbia reopened its bond due June 2042 to price an additional C$500 million on Monday. The 4.3% bonds priced at 82 bps over the government of Canada 4% 2041 benchmark bond for a yield of 4.187%.

Also on Monday, the Province of Ontario sold C$750 million in a reopening of bonds due 2041 on Monday, according to a source. Ontario sold the 4.65% bonds at 88.5 bps over the Canadian government benchmark bond to yield 4.242%.

The previous week, Quebec priced C$500 million in a reopening of its 4.5% provincial bonds due 2020 at 91.5 bps over government benchmark bonds on Sept. 21.

"The provincial issues went extremely well," said Sheldon Dong, vice president of fixed-income strategy at TD Waterhouse Canada in Toronto. "There's a lot of demand for long duration product right now."

Institutional buyers and pension funds are seeking longer-term debt, while demand stays positive despite that the 30-year Canadian bond yield fell to a record low on Tuesday, he said.

"There's a window for demand right now," he said.

Canadian government bonds rallied along with U.S. Treasuries, which sent yields down.

The Canadian government 10-year note yield fell to 2.743% from 2.803% on Monday. Canada's two-year note yielded 1.394% compared to 1.425% the previous day.

The yield on the U.S. Treasury 10-year note dropped 6 bps to 2.47% on Tuesday. The yield on the 30-year bond fell to 3.66% from 3.72%. The two-year note yield was little changed, down 1 bp at 0.41%.

Harvest bonds holding in

Harvest Operations Corp.'s bonds pretty much held steady in trading on Tuesday, according to a source.

The energy company's new 6.875% notes due 2017 (Ba1/BB-) were seen at 101 5/8 bid, 102 3/8 offered.

The notes are trading about at the same levels seen on Monday, the source said.

The company sold the notes on Friday at 99.319 to yield 7%.

The issuer is a Calgary, Alta.-based oil and gas producer, which is a wholly owned subsidiary of state-owned Korea National Oil Co.

Paul Deckelman contributed to this report

© 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.