It was not considered an active week, but it was a week of promise for the Canadian credit markets - a time for some additional appraisal of the recent and successful Royal Bank Golden Credit Card Trust securitization, and a time to realize that, this year at least, there would be no summer doldrums in the Canadian asset-backed market.
Despite some dealers reporting a generally quiet week, just below the surface percolated a number of new deals that should be priced sometime this month.
In the meantime, traders were narrowly divided on the initial secondary market response to the Golden Credit Card deal. Some sources said it was generally quiet as most of the credits are put away in investment accounts and not likely to be actively shopped around.
However, some dealers said there was a bit of secondary trading in evidence and at spreads that may have been a basis point tighter than original offering levels. But they said this might have been due as much to the overall firm tone of the Canadian market, as to any urgency to buy a piece of the deal.
Analysts note that there was strong interest at the issue. But Royal sized the deal to cover most, if not all of the buyers and if there is any unrequited interest, there is enough paper now in the pipeline to provide alternatives.
The first issue expected out of the pipeline is the long awaited Canadian Tire credit card deal, which may come this week. One rating agency source said he expects the offering will be for a $150 million to $200 million private placement.
However, considering that the company has a $160 million refinancing upcoming, there are expectations the sale may be for $250 million. One investment banking source also suggested that the reason the Tire deal has taken its time coming to market is that Canadian Tire's offering is going to price as a public issue. This view, though, is not widely shared.
Now that Dominion Bond Rating has assigned its "A" rating to the Highway 407 toll-backed bonds, sources expect that issue to motor its way into syndication. Expectations are that the financing, expected to aggregate between $750 million and $1 billion, will be sold in two separate offerings.
Traders were also talking of an imminent offering of "several hundred million dollars" by the Greater Toronto Airport Authority. They said the airport is in great need of the capital improvements and expansion the debt issue would finance.
Case Credit is also expected to tap the market in the near-term for about $200 million, backed by farm equipment receivables.
On the credit card trust side, Bank of Nova Scotia and the Bank of Montreal are mentioned as candidates for summer financings, most likely as the next proponents of public offerings.
- David Feldheim
