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Canadian bonds

weaker

TORONTO: Canadian bonds closed weaker but managed to rise above the day's lows after a day of lackluster trading, dealers said.

They said most of the losses came from profit-taking after spreads between Canada and the US narrowed significantly last week. A softer Canadian dollar, which suffered from uncertainty surrounding the upcoming independence referendum in Quebec also pressured the market, traders said.

Canada's 9.0 percent of 2025 lost C$0.08 at 102.15 to yield 8.793 percent against the US 30-year at 6.96 percent for a spread of 183 basis points.

Brian Garvey, economist with I.D.E.A. in New York, said there was also some swap-related selling of government of Canada bonds for the fresh 10-year General Electric Canada Eurobond.

General Electric Canada Corp set a C$100 million 8.625 percent bond due September 26, 2005, priced for a spread of 20 basis points over the 10-year government of Canada bond.

The 9.0 percent of 2004 was down C$0.18 at 103.77 to yield 8.404 percent against the US 10-year at 6.59 percent for a spread of 181 basis points.

The five-year area of the yield curve came under additional pressure ahead of Wednesday's auction of C$2.6 billion of 7.5 percent five-year bonds, traders said.

Analysts said the market tone is likely to remain negative, although no major losses were expected over the near term.

At the front end, Canada's three-month cash T-bill closed at 6.52 percent against the US three-month at 5.59 percent.-Reuter