In Canada, two asset-backed deals and a commercial mortgage-backed deal will likely come to market before the end of this month. With a Dec. 1 coupon and maturity payment in the country, these deals should be well-received.
Following the June 1 maturity payment, Canada saw a record amount of issuance. While transactions are expected to get done for the December payment, most of the market activity probably won't be seen until the beginning of next year.
"So you'll probably see that liquidity impact on market activity when you get into the early part of the new year," added David Allen, a managing director at CIBC World Markets. "It's too hard to get deals done in December."
"December is usually pretty slow," said Darcy Doherty, a director at Scotia Capital. "I don't think it will be a whole lot more active this year. Even though there is a big coupon coming up, there is a big chunk of cash coming in. That will pick up a ton of activity in the market in December."
Canadian Home Income Plan, the country's only issuer of reverse-equity mortgages, is expected to bring C$15 million in seven-year subordinate notes to market before the end of the month via its CHIP Master Term Trust.
Scotia Capital is managing the transaction, which is backed by reverse mortgages. The deal has been rated triple-B by Standard & Poor's Ratings Services and Dominion Bond Ratings Service.
CHIP's last transaction, a C$119 million five-year deal, priced in July. That deal's $34 million floating-rate tranche was heavily oversubscribed.
Also coming to market is a C$364 million offering from Honda Canada Finance Inc. via its HART program. The deal, backed by auto leases, consists of two senior class tranches, a C$100 million two-year tranche and a C$100 million three-year tranche, both rated Aaa by Moody's Investors Service. A C$151 million tranche of asset-backed commercial paper ranging from 30 days to 270 days was not rated.
CIBC is managing the deal, with BMO Nesbitt Burns and RBC Dominion Securities serving as co-managers. Preliminary price talk on the deal has the two year at +34 to +35, and the three year tranche at +39 to +40, with some analysts calling it about one or two basis points too expensive.
This is the first time Honda has put auto leases in its HART program. "The HART program was designed to handle anything under the sun," said Yatendra Killer of Honda Canada. "But we first approached it with tranches of loans; now we're putting some automobile leases in there."
Honda last utilized its HART program in March, with a C$500 million transaction.
Finally, Merrill Lynch Mortgage Loans is readying a C$287.6 million CMBS transaction. The four public tranches have been rated by S&P/CBRS, and is one of the first deals that the combined Standard & Poor's/Canadian Bond Ratings Service has rated.
The deal consists of 63 loans on 67 properties, with anchored retail making up 40% of the pool. Merrill Lynch Canada originated 56 of loans and GMAC Commercial Mortgage Corp. originated the remaining seven.
The largest loan in the portfolio is the Royal Host Portfolio, a C$32.2 million loan, secured by 11 limited-service hotels located across the country.
The deal is also expected to price this month, and could be all that is seen in the country until the new year. "There's other stuff brewing, but nothing that's that close," Allen said.