Canada Housing Trust, British Columbia reopen bond tranches; Kinross Gold bonds widen

By Cristal Cody

Prospect News, Dec. 14 - Canada Housing Trust and the Province of British Columbia brought bond deals in Canada on Wednesday as the markets start to quiet ahead of the year-end wrap.

Canada Housing Trust (Aaa/AAA/DBRS: AAA) sold C$5.5 billion in a reopening of the 1.85% Canada Mortgage Bonds due Dec. 15, 2016.

The Province of British Columbia (Aaa/AAA/DBRS: AA) also retapped two of its tranches to sell C$500 million on Wednesday.

There were "few government deals, otherwise it's fairly quiet," a bond source said.

The week is expected to be the last true week of bond sales since anything that prices next week likely would not settle until January, sources said.

"Bond yields are lower again - generally not good on almost every front," a source said. "We don't expect we'll see anything."

Fitch downgraded five European banks late Wednesday.

The markets generally were poor throughout the day as equities slumped, gold futures sank 5% and oil futures dropped on the continued European financial crisis.

Canadian miner Kinross Gold Corp.'s bonds traded wider in the secondary market.

Corporate bonds were mostly weaker. The Markit CDX Series 17 North American high-grade index eased 3 basis points to a spread of 130 bps.

Canadian government bonds stayed stronger Wednesday on weaker economic data and the European focus. The 10-year note yield fell 4 bps to 1.95%. The yield on the 30-year bond dropped to 2.53% from 2.57%.

Canada's factory sales fell a seasonally adjusted 0.8% to C$48.7 billion in October, the first drop in four months, Statistics Canada said on Wednesday.

Canada Housing Trust prices

In a deal expected for the past few weeks, Canada Housing Trust (Aaa/AAA/DBRS: AAA) sold C$5.5 billion in a reopening of the 1.85% Canada Mortgage Bonds due Dec. 15, 2016, according to a term sheet.

The series 43 bonds priced at 101.14 to yield 1.611%, or 36 bps over the Government of Canada benchmark.

The deal was launched on Tuesday in the 36 bps area.

CIBC World Markets Inc., BMO Capital Markets Corp., RBC Capital Markets Corp. and TD Securities Inc. were the lead managers.

The issue originally priced on Sept. 20 in a C$5 billion offering at 99.867 to yield 1.877%, or a spread of 44 bps over the Government of Canada benchmark. The total outstanding now is C$10.5 billion.

Canada Housing Trust is a unit of Canada Mortgage and Housing Corp., which offers financing, mortgage loan insurance and mortgage-backed securities.

British Columbia reopens bond

Also in the market, the Province of British Columbia (Aaa/AAA/DBRS: AA) raised C$500 million in reopenings of two tranches of bonds, according to a bond source.

The province sold C$250 million of 3.25% notes due Dec. 18, 2021 at 102.922 to yield 2.911%, or a spread of 93.5 bps over the Government of Canada benchmark.

In the second tranche, the province sold C$250 million of 4.3% bonds due June 18, 2042 at 115.542 to yield 3.47%, or a spread of 91 bps over the government benchmark.

CIBC World Markets Inc. was the lead manager. TD Securities Inc. and RBC Capital Markets Corp. were co-lead managers.

Both tranches were last reopened on Nov. 30.

The province sold C$400 million in the Nov. 30 reopening of the 3.25% 10-year notes at 100.975 to yield 3.136%, or a spread of 97 bps over the Government of Canada benchmark. The total outstanding is C$1.75 billion.

The tranche of 4.3% 30-year bonds priced in a C$200 million offering on Nov. 30 at 111.767 to yield 3.657%, or a spread of 95 bps. The total outstanding is C$3.45 billion.

More supply emerges

In other primary activity, Export Development Canada (Aaa/AAA) sold £250 million of fixed-rate debt instruments due Sept. 13, 2012 at par to yield 0.69%, according to a final term sheet.

The deal was non-syndicated. The Royal Bank of Scotland was the dealer.

Export Development Canada has applied to list the series 11-37 instruments for trading on the London Stock Exchange plc's regulated market.

Proceeds of the offering will be used for corporate purposes.

Ottawa-based Export Development Canada provides financing, insurance and risk management to Canadian exporters and investors expanding international operations.

Kinross Gold weak

In the secondary market, Kinross Gold's 5.125% senior notes due 2021 (Baa3/BBB-/BBB-) were quoted early Wednesday at 375 bps bid, 355 bps offered, a trader said.

The company sold $500 million of the notes on Aug. 16 at a spread of 290 bps over Treasuries.

The mining and gold ore processing company is based in Toronto.

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