Provincials, Hydro One tap private placement market; bonds flat to tighter in thin volume

By Cristal Cody

Prospect News, Dec. 23 - The Canadian markets ended mostly on nonexistent activity on Friday as traders cleared desks and other year-end paperwork and the handful of provincial deals priced earlier in the week settled, sources said.

"Very little on the screens," one bond source said.

Corporate issuers have stayed to the sidelines over the week, but three government issuers sold bonds, mostly through private placements.

The Province of Ontario sold C$1 billion in a reopening of the 3.15% notes due June 2, 2022. Half of the deal was sold into one account on a specific reverse inquiry and the rest was publicly syndicated, an informed source said.

The Province of Quebec raised C$300 million this week in an add-on to the 4.5% notes due Dec. 1, 2020 on a private placement basis.

In addition, Hydro One Inc. sold C$100 million of 4% medium-term notes due Dec. 22, 2051 in a private placement deal in one account.

Quiet primary in week ahead

No deal activity is expected in the week ahead. The Canadian markets closed early on Friday and are closed on Monday and Tuesday for holidays.

"Wednesday through Friday will be pretty quiet, I don't think we'll see any issuance," a syndicate source said. "The first week of January will probably be quiet because school doesn't start until Jan. 9 in most of the provinces and a lot of people take that first week in January off. We may see some issuance that first week but it should be light."

After that, the primary calendar for high-grade and provincial issuance should be active.

Bond spreads firmed in thin trading on the early market close on Friday with bonds generally 7 basis points to 8 bps tighter, a source said.

"Corporates have performed well," the source said. "The I.G. 17 in the U.S. is tighter by 10 basis points this week on more positive data out of the U.S."

The Markit CDX Series 17 North American investment-grade index ended Friday unchanged at a spread of 122 bps.

Canadian high-yield bonds, including Videotron Ltd.'s 6 7/8% senior notes due July 15, 2021, traded in over the week but ended Friday flat on the light activity, a trader said.

The Quebecor Media Inc. subsidiary (Ba1/BB/) priced C$300 million 6 7/8% senior notes due July 15, 2021 at par on June 16. Videotron's notes are trading about 100.5 bid.

"The last couple of weeks, there's definitely been a good bid to the market," the trader said. "In Canada, there's a lot of buying from retail accounts. Nothing going on today because no one's around."

Over December, high-yield bond spreads traded up about 1½ points, the trader said.

Provincial bonds traded in on the week. Five-year provincial bonds firmed about 4 bps, 10-years traded about 7 bps stronger and long bonds came in about 5 bps, a source said.

Canadian government bonds ended lower on Friday. The 10-year note yield rose 6 bps to 2.01%. The 30-year bond yield closed up 4 bps to 2.54%.

Statistics Canada said Friday that the real gross domestic product was unchanged in October, following four consecutive months of increases.

Quebec retaps notes

The Province of Quebec (Aa2/A+/DBRS: A) sold C$300 million in an add-on to its 4.5% notes due Dec. 1, 2020 at 113.412 to yield 2.794% on a private placement basis into one account, an informed source said.

The notes priced at a spread of 99.5 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the lead manager.

The province last reopened the issue on Oct. 12 in a C$300 million offering priced at 109.888 to yield 3.239%, or a 98 bps spread.

The issue now has a total of C$5.6 billion outstanding.

Ontario sells C$1 billion

The Province of Ontario (Aa1/AA-/DBRS: AA) sold C$1 billion in a reopening of its 3.15% notes due June 2, 2022 at 102.138 to yield 2.911%, according to a bond source on Friday.

The province priced the notes at a spread of 93 bps over the Government of Canada benchmark.

National Bank Financial was the lead manager.

The issue originally priced on Nov. 3 in a C$750 million offering at 99.589 to yield 3.196%, or a spread of 87 bps over the government benchmark.

Hydro One sells long bonds

Hydro One sold C$100 million of 4% medium-term notes due Dec. 22, 2051 at 99.98 to yield 4.001% in a private placement deal into one account, a bond source said Friday.

The long bonds (DBRS: A) priced at a spread of 155 bps over the Government of Canada benchmark.

National Bank Financial was the lead manager.

Proceeds will be used for general corporate purposes.

Toronto-based Hydro One provides electricity in the Province of Ontario.

© 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.