Canadian bond deals forecast for short week; Caterpillar Financial, Ford eyed; banks firm

By Cristal Cody

Prospect News, May 22 - Canadian markets ended quietly Tuesday after a long holiday weekend, but primary activity in the corporate and provincial markets is expected later in the week, bond sources said.

"The market's obviously in better shape compared to last Friday," a Canadian bond source said. "If market conditions continue to persist, we do expect some deals to materialize over the short week."

The bond markets in Canada were closed on Monday for the Victoria Day holiday.

Caterpillar Financial Services Corp. tapped the U.S. market on Tuesday in a $1.5 billion three-tranche offering and a deal from Caterpillar Inc.'s Canadian subsidiary, Caterpillar Financial Services Ltd., could be ahead, a source said.

"Caterpillar Financial, the Canadian arm, did a brief roadshow in Toronto late last week," the source said. "So on the back of this transaction, that's one name to really look out for this week if the market tone is there."

Another name to watch for upcoming offerings in Canada is from Ford Credit Canada Ltd., the Canadian subsidiary of Ford Motor Co., a bond source said on Tuesday.

Ford Motor was upgraded on Tuesday by Moody's Investors Service to investment grade.

Moody's raised Ford's rating to Baa3 from Ba2 and raised Ford Motor Credit Co. LLC's rating to Baa3 from Ba1. Fitch upgraded Ford Motor's credit rating to investment grade in late April. Standard & Poor's has not upgraded the company.

In the secondary market late afternoon, Caterpillar Financial's new issues traded flat to 3 basis points tighter, a trader said.

Canadian and U.S. bank and financial paper firmed on the day, sources said.

Paper from Bank of Nova Scotia and Toronto-Dominion Bank ended 7 bps to 8 bps better.

The Markit CDX Series 18 North American investment-grade index, which firmed 5 bps the precious day, ended unchanged on Tuesday at a spread of 118 bps.

Government bonds ended weaker. Canada's 10-year note yield rose 2 bps to 1.91%. The 30-year bond yield closed at 2.45% from 2.43%.

Scotiabank firms

In the secondary market, Bank of Nova Scotia's 2.55% notes due 2017 (Aa1/AA-) firmed 7 bps to 100 bps bid on Tuesday from Friday's session, a source said.

Scotiabank sold $1.25 billion of the notes (Aa1/AA-/) on Jan. 5 at a spread of 172 bps over Treasuries.

The Canadian bank is based in Halifax, N.S.

TD tightens

Toronto-Dominion Bank's 2.375% notes due 2016 (Aaa/AA-) traded tighter in the U.S. secondary market at 79 bps bid on Tuesday from 87 bps seen on Friday, a source said.

Toronto-Dominion sold $600 million of the notes in a reopening on Nov. 3, 2011 at 117 bps over Treasuries.

The bank and financial services company is based in Toronto.

© 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.