Financement-Quebec sells C$500 million; provincial deals eyed; corporate calendar light

By Cristal Cody

Prospect News, April 19 - Financement-Quebec raised C$500 million in a reopening of its six-year notes in an offering in Canada on Thursday.

"We had no problems selling our bonds," a syndicate source said. "It was a successful deal."

On the corporate side, the day was mostly a "big fat nothing," a corporate bond source said. "Any form of a calendar isn't really developing."

Light, if any, corporate and provincial activity is expected on Friday, sources said.

"There was only one today, I think it will probably be it for the week," a provincial source said. "Looking ahead to next week, there is speculation we could see two to three new issues."

The provinces of Quebec, Ontario and British Columbia are expected to be in the market.

"Quebec is rumored with something in the long end, probably 30 years," the bond source said. "Ontario will probably want to take a look at the market next week but not until Wednesday at the earliest [after the budget is approved on Tuesday] and will probably look at 10 years.

"The Province of British Columbia had a pretty busy week having done U.S. dollar issuance yesterday, but they, too, would like to get something done in Canada."

The Province of British Columbia sold $1.5 billion of bonds (Aaa/AAA/AAA) in the U.S. market on Wednesday.

Provincial bond spreads are trading better on the week. Five-year provincial notes are in about 2 basis points, 10-year notes are trading 3 bps to 4 bps tighter and the long end has firmed 2 bps on the week.

"It's been an OK week for spread performance," a source said.

The lack of new issues in the corporate markets has helped secondary trading, though by only so much, a bond source said.

"It's been relatively quiet on the new issue side. Secondary has gotten a little bit better," the source said. "That might be a factor if we have no new issues so more people are looking in the secondary market."

Interest has picked up in higher-rated cable and telecom bonds, the source said.

"Some of them had gotten pushed wider the last week or two and people are just saying they look a little cheap right now," the source said.

The Markit CDX Series 18 North American investment-grade index eased 1 bp to a spread of 100 bps on Thursday.

Government bonds were mixed. Canada's 10-year note yield fell 1 bp to 2.04%. The 30-year bond yield was unchanged at 2.59%.

Financement-Quebec prices

Financement-Quebec priced C$500 million in an add-on to its 2.4% medium-term notes due Dec. 1, 2018 at 99.41 to yield 2.664% on Thursday, a bond source said.

The notes (Aa2/A+//DBRS: A) priced at a spread of 92 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the lead manager.

The notes are non-callable.

The agency sold the issue on Jan. 19 in a C$500 million offering at 99.961 to yield 2.406%, or 86 bps over the Canadian government benchmark. The issue was reopened on Jan. 26 to sell C$500 million of the notes at 99.823 to yield 2.428%, or 84 bps plus the government benchmark.

The total outstanding now is C$1.5 billion.

Financement-Quebec is a Quebec provincial agency that provides financial services to public institutions, including health care, school boards, community colleges and universities.

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