Pembina sells C$450 million; Glacier prices asset-backed notes; Ontario plans dollar deal

By Cristal Cody

Prospect News, Oct. 17 - Canadian deal action continued on Wednesday with a C$450 million investment-grade senior medium-term note sale from Pembina Pipeline Corp. and a C$423 million two-tranche offering of credit card asset-backed notes from Glacier Credit Card Trust.

Pembina Pipeline brought its sale early, followed in the afternoon by Glacier Credit Card Trust's offering of asset-backed securities.

Canadian credit card asset-backed issuance totals about C$8.3 billion to date in 2012, up from initial estimates of C$6 billion to C$7 billion, according to a Standard & Poor's report released the previous day.

Glacier Credit Card Trust was last in the market with a debt offering on May 24 when it sold C$200 million of 2.807% senior credit card asset-backed notes due May 19, 2017 (DBRS: AAA) at par.

In primary activity coming up, the second U.S. dollar-denominated provincial deal of the week is expected following Tuesday's upsized $1.25 billion sale of 2% 10-year notes from the Province of British Columbia.

The Province of Ontario plans to bring a benchmark five-year note deal on Thursday, according to a source.

In the high-yield market, Paramount Resources Ltd.'s notes traded down about ½ point in quiet trading as the sector shook off the announcement that Exxon Mobil Corp. plans to buy Calgary, Alta.-based oil and gas exploration company Celtic Exploration Ltd. for C$2.6 billion.

Canadian junk bonds mostly traded flat on the day, a trader said.

"Very quiet," the source said.

Government bonds sold off across the curve following U.S. Treasuries that traded lower on better economic data and Moody's Investors Service's affirmation of Spain's investment-grade rating.

Canada's 10-year note yield climbed to 1.92% from 1.83%. The 30-year bond yield rose 7 basis points to 2.51%.

Pembina prices C$450 million

Early on Wednesday, Pembina Pipeline priced C$450 million of 3.77% 10-year senior medium-term notes (/BBB/DBRS: BBB) at 99.983 to yield 3.772%, according to an informed source.

The series 2 notes due Oct. 24, 2022 came at a spread of 185 bps over the Government of Canada benchmark.

CIBC World Markets Inc. and National Bank Financial Inc. were the lead managers. Co-managers were BMO Capital Markets Corp., RBC Capital Markets LLC, Scotia Capital Inc. and TD Securities Inc.

The issue may be redeemed at the Canada bond yield plus 46 bps.

Proceeds will be used to repay a portion of the company's existing credit facility.

Calgary-based Pembina Pipeline is a transportation and service provider for the energy industry.

Glacier sells asset-backeds

In the asset-backed deal, Glacier Credit Card Trust sold C$423 million in two tranches, an informed bond source said.

In the first tranche, the trust sold C$400 million of 2.394% series 2012-2 five-year senior notes (/AAA/DBRS: AAA) at par to yield a spread of 97 bps over the Government of Canada benchmark.

The trust also sold a smaller tranche of C$23,281,000 of 3.174% series 2012-2 five-year subordinated notes (/A/DBRS: A) at par to yield 175 bps over the government benchmark.

BMO Capital Markets Corp. and CIBC World Markets were lead managers. TD Securities Inc., RBC Capital Markets LLC, Scotia Capital Inc., National Bank Financial and HSBC Capital (Canada) Inc. were the co-managers.

The trust will use the proceeds to finance an undivided co-ownership interest in MasterCard and retail credit card receivables originated and managed by Canadian Tire Bank, a subsidiary of Toronto-based Canadian Tire Corp., Ltd.

Ontario expected to price

The Province of Ontario is planning a benchmark sized sale of five-year notes (Aa2/AA-/), a market source said on Wednesday.

The sale is expected to go overnight and price on Thursday, the source said.

Bookrunners are Barclays, Citigroup Global Markets Inc., CIBC World Markets and Morgan Stanley & Co. LLC.

Paramount Resources down

In the junk bond secondary market, Paramount Resources' 8¼% senior notes due 2017 (Caa1/B+) traded at 106 bid, no offer on Wednesday, a trader said.

The notes were seen on Friday at 106.5 bid.

The company first sold C$300 million of the notes on Nov. 30, 2010 at par and sold another C$70 million in an add-on on Jan. 28, 2011 at 103.

Calgary-based Paramount Resources is an oil and natural gas exploration, development and production company.

Andrea Heisinger contributed to this review

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