Canada Housing Trust add-on improves in secondary trade; Inmet Mining prices; market firm

By Rebecca Melvin

New York, Dec. 13 - In a fairly quiet day in the Canadian bond markets Thursday, Canada Housing Trust priced a C$5 billion add-on to its 1.7% mortgage bonds due Dec. 17, 2017, and those bonds improved in trade in the aftermarket by about 0.5 basis point, an informed market source said.

In addition, Inmet Mining Corp. priced a $500 million issue of 8.5-year senior notes (B1/B+/) at par to yield 7½%, according to a syndicate source. The yield print on those bonds was at the tight end of price talk set in the 7 5/8 area.

Both deals priced as expected in a "pretty quiet day," a market source said.

In the public debt segment, the tone remained positive. There has been limited supply in provincial debt this past week as issuance cools heading into the holidays and year-end.

"In the next couple of weeks, supply will be quite limited and the equity and credit markets have done well," a market source said.

Provincial debt was said to have improved about 2 bps across the curve.

An exception to this strength was the debt of the Province of British Columbia, which underperformed 1 bp or 2 bps after Moody's Investors Service said it revised its outlook to negative from stable, reflecting Moody's assessment of the risks to the province's ability to reverse the recent accumulation in debt with the softened economic outlook, weaker commodity prices and continued expense pressures.

British Columbia is an Aaa issuer and has about C$39.8 billion in debt securities.

"The only underperforming provincial is BC," a source said, adding that there was not a lot of British Columbia debt in trade, but that the paper had been marked a little bit wider.

Overall, however, the session was positive for spreads going into the quiet period.

Positive equity tone lent support to the improved tone.

Canadian government bond prices were lower across the curve. The two-year bond dipped 5 Canadian cents to yield 1.119%, and the benchmark 10-year bond fell 43 Canadian cents to yield 1.806%.

Canada Housing Trust improves

Canada Housing Trust sold a C$5 billion add-on to its existing 1.7% mortgage bonds due Dec. 17, 2017 at 100.028 to yield 1.694% and at a spread of 35 bps over the Government of Canada benchmark, an informed source said.

In afternoon trading, the paper was trading 0.5 bps better for a 34.5 bps spread.

The trust last sold C$5 billion of the Canada mortgage bonds on Sept. 19 at 99.777 to yield 1.745%, or a spread of 34 bps over the Government of Canada benchmark.

CIBC World Markets Inc., National Bank Financial Inc., BMO Capital Markets Corp. and RBC Capital Markets Corp. were leads on the offering with TD Securities Inc. also involved in the underwriting.

The trust is a unit of Canada Mortgage and Housing Corp., which provides financing, mortgage loan insurance, mortgage-backed securities and housing policy and programs.

Inmet prices

The books on Inmet Mining closed at 12:30 p.m. ET on Thursday. The Toronto-based copper and zinc mining company priced a $500 million issue of 8.5-year senior notes (B1/B+/) at par to yield 7½%, according to a syndicate source.

The yield printed at the tight end of yield talk set in the 7 5/8%.

Global coordinator and joint bookrunner Credit Suisse Securities (USA) LLC will bill and deliver. J.P. Morgan Securities LLC was also a global coordinator and joint bookrunner.

The company plans to use the proceeds to fund capital expenditures in connection with its Cobre Panama project and for general corporate purposes.

Paul A. Harris contributed to this review

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