National Australia Bank sells C$100 million; provincial deals to pick up; Ontario bonds firm

By Cristal Cody

Prospect News, April 1 - Canadian bond markets ended the day on little activity with one Canadian dollar-denominated deal priced earlier from National Australia Bank Ltd. for European investors, according to sources.

"It's not meant for Canadian investors so there's no liquidity provided by Canadian dealers," one source said.

Corporate bond activity was fairly light for a typical Friday.

"It's been a quiet day," one source said.

Provincial bonds closed out Friday a half basis point to 1 bp tighter, a source said.

"Ontario's fives and longs opened up about a half basis point tighter, 10s are about 1 basis point tighter," the source said.

The Province of Ontario (Aa1/AA-/DBRS: AA) on Thursday sold C$750 million in a reopening of its 4% benchmark notes due June 2, 2021 at a spread of 71.5 bps over the Government of Canada benchmark.

The bonds traded tighter at 70 bps bid late Friday, a source said.

The pace in provincial deals is expected to ramp up as the budget season winds down, a source said.

"We have Nova Scotia's budget coming up on Tuesday, Manitoba's budget the following Tuesday and Newfoundland the following week. A few budgets remaining, but I would expect issuance to pick up," a source said.

While Quebec is "always a potential issuer," Ontario is likely to be back in the market fairly quickly, the source said.

"Ontario yesterday was rumored at looking at doing a long deal but came with the 10, so I would assume they will come with a long deal next week," the source said.

Canadian government bonds ended Friday lower, while U.S. Treasuries were higher on the day, on new Federal Reserve member comments that support the government's bond buyback program.

"Bond underlyings are a little volatile," a source said. "Bonds opened up tighter given the sell-off we saw yesterday and the Fed comments, that flowed into our market and Canadas were a little weak to start the day. It kept going until the Fed speaker's dovish commentary. Bonds sold off after that."

Canada's 10-year bond yield rose 2 bps to 3.37%, while the 30-year bond yield rose 3 bps to 3.78%.

Treasuries ended Friday higher across the curve, sending yields down. The 10-year benchmark Treasury note yield fell 2 bps to 3.44%, while the 30-year bond yield dropped 3 bps to 4.48%.

National Australia Bank sells euro notes

In the day's only deal, the National Australia Bank (Aa1/AA) sold C$100 million of 3% euro medium term notes due April 15, 2014 on Friday at 100.958.

The notes were listed in Luxembourg and sold in Europe.

RBC Capital Markets Corp. was the lead manager.

Melbourne-based National Australia Bank is a financial services organization with operations in Australia, New Zealand, Asia, the United Kingdom and the United States.

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