Canada secondary trading active on year-end buying; activity to taper off for holiday

By Cristal Cody

Prospect News, Dec. 20 - Canadian secondary market activity picked up on Thursday with traders balancing books while primary action came to a halt as the year closes, bond sources said.

"There has been a little bit of buying, partly because there hasn't been any issuance over the week," a Canadian high-grade bond source said, adding "but nothing big - C$1 million here, a couple million there."

No corporate bond deals were brought over the week, but the Province of Quebec sold C$1.2 billion in three provincial offerings on Tuesday.

Trading was seen in financial, telecommunications, utility and infrastructure bonds over the day.

"Slightly more buying than selling," the source said.

Bank paper traded flat to wider on the day, according to a market source.

Another round of stronger trading likely will continue early Friday and "then it's done" ahead of the Christmas holiday, the bond source said.

The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 89 bps on Thursday.

The Markit CDX Series 18 North American high-yield index rose to 101.90 from 101.81.

An investment-grade bond source at another desk said the day was "very quiet - we're in holiday mode."

A high-yield bond source said he had kept his "head down with a lot of year-end books."

Canadian government bonds ended slightly better. The 10-year note yield fell 1 bp to 1.84%. The 30-year bond yield closed 1 bp lower at 2.41%.

Looking ahead, the Bank of Canada said that it plans to hold 11 bond auctions in the first quarter.

In economic data, Canadian retail sales rose 0.7% in October, Statistics Canada said in a report.

TD Bank eases

Toronto-Dominion Bank's U.S. dollar paper closed flat to wider in the secondary market, a market source said.

Toronto-Dominion Bank's 1.625% covered bonds due 2016 widened 3 bps to 10 bps on Thursday.

TD Bank sold $3 billion of the 1.625% five-year bonds on Sept. 7, 2011 at a spread of mid-swaps plus 44 bps or Treasuries plus 73.4 bps.

The bank and financial services company is based in Toronto.

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