Canada trading activity quiet; Manitoba plans sale of global debentures; bank paper flat

By Cristal Cody

Prospect News, Aug. 28 - Market activity in Canada slowed on Tuesday as desks emptied ahead of the long holiday weekend, according to bond sources.

The Canadian markets will close early on Friday and close on Monday for the Labor Day holiday.

Not much action is expected the rest of the week, one investment-grade bond source in Canada said.

"I would expect it to be dead with the early close," the source said. "I've heard of nothing in terms of the pipeline."

Another bond source agreed, saying he doesn't "expect to see any supply this week. This week will continue to be quiet, but we do have a very busy September ahead of us. [There is] a busy roadshow calendar, and a lot of markets will be looking to fund when everyone gets back from the holiday."

In the U.S. market, the Province of Manitoba announced plans on Tuesday for a sale of global debentures.

Domestically, stronger Canadian bank earnings data from Bank of Montreal and Bank of Nova Scotia was digested over the day.

More "bank earnings are still on the way," one source said. "Bank earnings were largely positive in Canada so far."

Bank paper traded modestly tighter the previous day and paper from Bank of Montreal and Scotiabank was flat to 1 bp better on Tuesday, sources said.

"The market overall was positive yesterday and overall spreads performed modestly well," a bond source said. "Today, the market wasn't as good as yesterday, but spreads are holding in. Otherwise, it's just a very quiet secondary market."

The Markit CDX Series 18 North American investment-grade index eased 1 bp to a spread of 101 bps on Tuesday.

The Markit CDX Series 18 North American high-yield index dropped to 98.12 from 98.22.

Canadian government bonds were mixed on the day. Canada's two-year note yield rose 1 bp to 1.17%, while the 10-year note yield fell 1 bp to 1.80%. Canada's 30-year bond yield fell 3 bps to 2.36% on the day.

Manitoba plans debentures

The Province of Manitoba announced plans on Tuesday for an offering of global debentures in a 424B3 filing with the Securities and Exchange Commission.

The debentures will be non-callable.

Bookrunners are CIBC World Markets Corp., HSBC Securities (USA) Inc., National Bank of Canada Financial and Scotia Capital (USA) Inc.

Proceeds will be used for advances to Manitoba Hydro and/or for general government programs.

Andrea Heisinger contributed to this review

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