Quebec prices C$500 million of long bonds; Korea Gas holds roadshow; bank paper weaker

By Cristal Cody

Prospect News, April 24 - Tuesday saw slight pricing action in the Canadian bond markets with an offering of C$500 million from the Province of Quebec.

"That was it" in primary activity, an informed source said.

A maple bond deal is in the works from Korea Gas Corp., which wrapped a two-day roadshow in Canada on Tuesday.

Market tone improved slightly from Monday. The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 100 bps.

Bank and financial paper traded mostly lower, a source said.

Government bonds ended weaker, in line with U.S. Treasuries. Canada's 10-year note yield rose 3 bps to 2.07%. The 30-year bond yield closed up 2 bps to 2.62%.

Statistics Canada said retail sales fell 0.2% in February. Key economic data for the week includes payroll and gross domestic product reports on Thursday and Friday.

Quebec sells C$500 million

In the primary market on Tuesday, the Province of Quebec (Aa2/A+/DBRS: A) priced C$500 million in a reopening of the 4.25% medium-term notes due Dec. 1, 2043 at 109.798 to yield 3.72%, a bond source said.

The notes priced at a spread of 110.5 bps over the Government of Canada benchmark.

National Bank of Canada was the bookrunner.

The province first sold the notes in a C$500 million offering on Aug. 12, 2011 at 103.875 to yield 4.034%, or 97 bps over the government benchmark.

The issue was reopened on March 29 to add C$500 million of notes priced at 110.863 to yield 3.667%, or a spread of 101.5 bps over the Government of Canada benchmark. The total outstanding is C$4 billion.

Korea Gas holds roadshow

Korea Gas (A1/A/A+) held a roadshow in Canada for a maple bond offering, an informed source said on Tuesday.

The company started the roadshow on Monday.

Additional deal information was not immediately available.

Korea Gas was last in the Canadian market last year with an offering of C$300 million of 4.58% senior notes due May 12, 2016, which priced on May 3, 2011 at 99.978 to yield 4.585%, or a spread of 203 bps over the Canadian bond curve.

Korea Gas is a public natural gas company incorporated by the Korean government.

BMO lower along with sector

The financial sector edged lower in the secondary market on Tuesday, a source said.

In trading, Bank of Montreal's 6.17% notes due 2018 fell to 116.82 bid from 117.05 bid the previous day, the source said.

The financial services company is based in Toronto and Montreal.

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