Canadian bonds better bid; Manulife, Sun Life come in more than 50 bps; Viterra lower

By Cristal Cody

Prospect News, March 30 - The Canadian bond markets stayed fairly quiet on Friday on the last day of the quarter, sources said.

"Most spend the last day of the quarter just cleaning up their books," a bond source said. "Most of the trading flows are quarter-end portfolio adjustments."

Bank and financial paper is trading 3 basis points to 5 bps better on the week.

But the big move has been in bonds from insurance companies Manulife Financial Corp. and Sun Life Financial Inc. over the past month, one source said.

"The insurance companies that did transactions a month or so ago are both in approximately 50 basis points," the source said. "A lot of it is driven more by lack of supply. We had a very dry month of March by way of supply in Canada. A lot of people were expecting deposit notes."

The market saw two deals from First Capital Realty Inc. and H&R Real Estate Investment Trust this week and only a handful of deals in March. Several Canadian issuers brought deals instead in the U.S. markets over the past month.

"It's certainly put a little bit of a bid to the market in certain sectors," one source said.

Barrick Gold Corp.'s $2 billion of notes (Baa1/A-/), which priced in two tranches in the U.S. market on Thursday, traded better in Friday's session.

The Markit CDX Series 18 North American investment-grade index ended the day 2 bps tighter at a spread of 91 bps.

Canadian high-yield bonds traded stronger for the end of the month and spreads have tightened 6 bps over the week, a bond source said.

Viterra Inc.'s bonds dropped in volatile trading as the market waits to see how the company's buyout by Glencore International plc will be structured and how it affects the company's outstanding debt, a source said.

Government bonds saw losses over the day. Canada's 10-year note yield edged up 3 bps to 2.11%. The 30-year bond yield rose 2 bps to 2.66%.

Manulife comes in

The 4.165% subordinated debentures due 2022 that Manulife Financial affiliate Manufacturers Life Insurance Co. sold in February have come in 60 bps to 210 bps bid in the secondary market, a source said on Friday.

Manulife sold C$500 million of the 10-year debentures (DBRS: A) at a spread of 270 bps over the Canadian bond curve on Feb. 14.

Manufacturers Life Insurance is a unit of Toronto-based financial services and reinsurance company Manulife Financial.

Sun Life Financial stronger

Sun Life Financial's 4.38% subordinated debentures due 2022 are trading more than 50 bps better, a source said on Friday.

"Right now it's 245 [bps] bid," the source said.

Sun Life Financial (/A-/DBRS: A) sold C$800 million of the debentures at a spread of 297 bps over the Government of Canada benchmark on Feb. 28.

The fixed- to floating-rate issue has a final maturity of March 2, 2022 but converts to a floating rate on March 2, 2017.

Toronto-based Sun Life Financial is one of the largest international financial services companies in Canada and provides financial planning, life insurance, health insurance and other services.

Barrick tightens

Barrick Gold's $1.25 billion of 3.85% notes due 2022, which was sold a spread of Treasuries plus 170 bps on Thursday, traded tighter at 161 bps bid, 157 bps offered late Friday, a trader said.

The tranche of 5.25% bonds due 2042 was seen closing at 193 bps bid, 188 bps offered.

Barrick Gold sold $750 million of the 30-year bonds at 200 bps over Treasuries.

The gold mining company is based in Toronto.

Viterra lower

In the high-yield secondary market, Viterra's 6.406% notes due 2021 traded lower at 110.5 bid on Friday, a source said.

The bonds were quoted a week ago at 111 bid. The bonds priced on Feb. 10, 2011 at par.

Viterra (Ba1/BBB-//DBRS: BBB) announced on March 20 that investment-grade rated Glencore International will acquire Viterra for C$16.25 a share. The acquisition is in partnership with Agrium Inc. and Richardson International Ltd.

The deal is valued at more than $6 billion, not including C$1.2 billion of debt to be refinanced or assumed at Viterra.

Regina, Sask.-based Viterra provides agricultural ingredients to global food manufacturers.

© 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.