Manitoba taps market; financials better but under pressure, John Deere Credit paper widens

By Cristal Cody

Prospect News, Oct. 7 - The Province of Manitoba sold C$300 million five-year debentures before the Canadian bond markets closed early on Friday, ahead of the long holiday weekend.

Bond markets in Canada will be closed on Monday in observance of Thanksgiving and the United States' markets will be closed on Monday for Columbus Day.

"With the move in equities and late day on some of the downgrades, bonds are relatively unchanged in Canada today," an informed source said Friday. "It was very positive this morning - the day's ending up a little indifferent."

Government bonds slid after stronger jobs data in Canada and the United States early Friday and regained some loses after Fitch Ratings downgraded Italy and Spain.

Statistics Canada said employment rose by 61,000 in September. The growth pushed the unemployment rate down 0.2% to 7.1%, the lowest rate since December 2008.

Canada's 10-year note yield rose 2 basis points to 2.24%. The 30-year bond yield ended higher at 2.82% from 2.8%.

The short week ahead should not put a crimp in any new deal plans, a source said.

"There are a bunch of issuers that would like to come and will give next week a look," the source said. "It just depends on where tone is on Tuesday and if nothing happens over the weekend."

In the secondary market on Friday, John Deere Credit Inc.'s three-year notes that were sold a day earlier traded about 2 bps wider.

American Express Canada Credit Corp.'s five-year notes that were reopened last month also ended wider on Friday.

Toronto-Dominion Bank's five-year deposit notes were seen "in about 7 basis points from the wides this week," a trader said.

Bank of Montreal's notes also traded better on the day but still weaker since issuance.

"Financials widened earlier in the week, and there was a lot of pressure on U.S.-based names," a source said. "They appear to be recovering a little but there is just so much global pressure on financials."

The Markit CDX Series 17 North American high-grade index ended unchanged at a spread of 139 bps.

Manitoba sells C$300 million

The Province of Manitoba (Aa1/AA/DBRS: A) raised C$300 million in an offering of 2.05% five-year debentures at 99.914 to yield 2.068% on Friday, a bond source said.

The province sold the notes due Dec. 1, 2016 at a spread of 54 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. was the lead manager.

John Deere Credit wider

John Deere Credit's 2.5% notes due Oct. 14, 2014 traded weaker at 111 bps bid in the secondary market, a trader said Friday.

The company (A2/A/DBRS: A) sold C$200 million of the three-year notes (DBRS: A) at a spread of 113 bps over the Canadian government benchmark on Thursday.

The Burlington, Ont.-based equipment financing and leasing company is a unit of Deere & Co.

American Express Canada eases

American Express Canada Credit's 3.6% medium-term notes due June 3, 2016 traded Friday wider at 210 bps bid, a trader said.

The company sold C$200 million in a Sept. 27 reopening of the notes (A2/BBB+/DBRS: A) at a 200 bps spread over the Government of Canada benchmark.

American Express Canada is a division of the New York-based credit-card company American Express Co.

Toronto-Dominion better

Toronto-Dominion Bank's 2.948% deposit notes due Aug. 2, 2016 traded Friday at 116 bps bid, 111 bps offered, about 7 bps tighter on the week, a trader said.

The bank (Aaa/AA-/DBRS: AA) sold C$1.75 billion of the five-year notes on July 27 at a spread of 83 bps.

The bank and financial services company is based in Toronto.

Bank of Montreal active

Also in secondary trading, the 2.96% deposit notes due Aug. 2, 2016 that Bank of Montreal (Aa2/A+/DBRS: AA) sold in the summer were seen at 121 bps bid, a trader said.

BMO priced C$1.3 billion of the five-year notes on July 27 at a spread of 84 bps over the government benchmark.

The financial services company is based in Montreal and Toronto.

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