CIBC sells kangaroo bonds; Precision Drilling deal 'cheap'; Canada Housing eyes five-years

By Cristal Cody

Prospect News, March 11 - Canadian Imperial Bank of Commerce sold A$700 million 6.25% kangaroo senior bonds due March 22, 2016, the largest reported issuance Friday from a Canadian issuer.

Meanwhile, additional details of Precision Drilling Corp.'s note sale emerged Friday. Precision Drilling's notes were seen up at 101 bid in trading, a source said.

Separately, Canada's provincial bond markets ended the week quiet as issuers prepare new fiscal year budgets.

"People are starting to turn their attention to next week's Canada Mortgage deal," a source said.

Canada Housing Trust, a unit of Canada Mortgage and Housing Corp., is expected to launch C$6 billion to C$6.25 billion of notes due June 2016 on Tuesday in a deal that is scheduled to price on Wednesday.

Canada Mortgage and Housing offers financing, mortgage loan insurance, mortgage-backed securities and other programs.

Government bonds were mixed on Friday as oil prices dropped below $100 a barrel after an earthquake hit Japan.

Canada's 10-year bond yield rose to 3.275% from 3.26%. The two-year note yield fell to 1.748% from 1.77%.

In economic news, Statistics Canada said employers added 15,100 to payrolls February, much lower than the 25,000 forecast. The unemployment rate was unchanged at 7.7%.

U.S. Treasuries fell on the long end of the curve on Friday as the market digested the week's auctions of $66 billion of debt.

The 10-year note yield ended at 3.4% from 3.36% the previous day. The 30-year bond yield rose 5 basis points to 4.55%.

Retail sales data came in mostly in line with expectations. The Commerce Department said retail sales increased 1% in February to $387.1 billon on auto and gas sales. In other data, the University of Michigan's consumer sentiment index dropped more than expected to 68.2 from 77.5.

"Equities performed so well considering the earthquake and geopolitical risks for the weekend, even on data that wouldn't normally be equity friendly - that kept bond prices in check to some extent," said John Briggs, a strategist with RBS Securities Inc.

CIBC sells kangaroo bonds

In Canadian Imperial Bank of Commerce's second Australian bond sale, the bank sold A$700 million 6.25% senior bonds due March 22, 2016 at 99.619 to yield 6.34% on Friday, a source said.

The bonds (Aaa/AAA/AAA) priced at a spread of 109 bps over the Australian government benchmark bond.

The bonds are guaranteed by CIBC Covered Bond Guarantor LP.

Commonwealth Bank of Australia, HSBC Capital (Canada) Inc. and UBS Investment Bank were lead managers. CIBC World Markets Inc. was a co-manager.

The Canadian Imperial Bank of Commerce is a Toronto-based financial institution.

Precision Drilling goes cheap

Precision Drilling sold C$200 million 6.5% senior notes due 2019 (Ba2/BB+/) at par, and the notes were quoted trading in the secondary market at 101 bid, "no sellers," a source said Friday.

The notes were sold at a spread of 335.25 bps over the Government of Canada benchmark.

"It was a very cheap deal and went very well," a source said.

RBC Capital Markets Corp., Credit Suisse and TD Securities Inc. were the lead managers.

The proceeds along with available cash will be used to repay outstanding debt under the company's senior secured revolving credit facilities.

Precision is a Calgary, Alta.-based equipment and services provider for the oil and gas industry.

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