Glacier Credit Card, AltaGas, Canadian Western Bank flood market; Paramount to start roadshow

By Cristal Cody

Prospect News, Nov. 23 - The Canadian high-grade bond market heated up early Tuesday with the announcements of deals from 407 International Inc., Canadian Western Bank Group, Glacier Credit Card Trust and AltaGas Ltd.

"The markets globally and in Canada were soft, but the markets [in Canada] are insulated from what's going on in Europe," a source said. "When you have issuers like Glacier and Canadian Western, which is a well-respected bank, that made deals possible and were just what investors were looking for."

In high-yield activity in Canada, Paramount Resources Ltd. will start a roadshow on Thursday for its C$250 million offering of senior notes due 2017 (Caa2/B+), according to an informed source.

Elsewhere, debt from OPTI Canada Inc. and Valeant Pharmaceuticals International debt widened, while trading was active in Catalyst Paper Corp.'s bonds, sources said.

Canadian government bonds were lower on Tuesday on stronger economic data. Canada's 10-year bond yield rose to 3.105% from 3.06%. The two-year note yield closed at 1.607%, up from 1.6%.

Statistics Canada said the annual core inflation rate rose in October more than expected to 2.4% from 1.9% in September on higher energy prices.

407 International prices

Electronic toll road company 407 International sold C$700 million in a two-part deal, upsized from C$500 million, on Tuesday, a source said.

The company sold C$300 million of series 10-D1 3.87% subordinated medium-term notes due Nov. 24, 2017 at 99.97 to yield 3.875%. The notes (BBB) were sold in line with guidance at a spread of 115 basis points over the Canadian benchmark.

The seven-year notes have a Canada call at 28.75 bps.

In the second tranche, 407 International sold C$400 million of series 10-A3 4.3% senior medium-term notes due May 26, 2021 at 99.966 to yield 4.303%. The notes (A) priced at spread of 108.8 bps over the Canadian benchmark bond.

The notes have a Canada call at 27.25 bps.

The tranche was upsized from C$250 million and priced on the tighter side of guidance of a spread of 110 bps.

The lead managers were BMO Nesbitt Burns Inc. and RBC Dominion Securities Inc. Proceeds from the series 10-A3 notes will be used to repay the C$250 million principal amount of series 08-A1 senior notes due on Jan. 25, 2011, at maturity or upon redemption, and for general corporate purposes.

The proceeds from the series 10-D1 notes will be used to repay, in part, the C$300 million outstanding of series 08-D1 subordinated notes due Jan. 31, 2011, on maturity or redemption.

In the secondary market, both tranches were seen "trading a little bit inside where they came," a trader said.

The toll highway operator is based in Woodbridge, Ont. 407 International is owned by a consortium comprised of Cintra Infraestructuras, Intoll, SNC-Lavalin Inc. and Canada Pension Plan Investment Board.

Canadian Western Bank upsizes

Canadian Western Bank sold an upsized C$300 million of 4.389% fixed/floating-rate subordinated notes with an initial maturity of Nov. 30, 2015 at par on Tuesday, according to a source.

The series D notes (DBRS: BBB) priced at a spread of 200.2 bps over the Canadian benchmark bond.

The sale was upsized from C$250 million and priced within guidance of 200 bps, plus or minus 5 bps.

If the notes are not called in 2015, the issue will float at flat to the equivalent CDOR-swapped original spread to Nov. 30, 2020, a source said.

RBC Capital Markets Corp. and National Bank Financial Inc. were the lead bookrunners.

The Edmonton, Alta.-based bank offers business and personal banking across western Canada.

Glacier offers 3.158% notes

Glacier Credit Card Trust priced C$250 million of 3.158% five-year credit card receivables-backed notes (AAA) on Tuesday, a source said.

The company sold the notes due Nov. 20, 2015 at par, or a spread of 82.7 bps over the Canadian benchmark bond. The notes were talked at 85 bps plus or minus 2 bps.

BMO Capital Markets Corp. and CIBC World Markets Inc. were the lead bookrunners.

The proceeds will be used to finance the purchase of an undivided co-ownership interest in the credit card receivables originated and managed by Canadian Tire Bank.

Glacier Credit Card Trust is a single-purpose trust containing financial services credit card receivables from Canadian Tire Bank, the financing arm of Toronto-based retailer Canadian Tire Corp.

AltaGas upsizes

AltaGas sold an upsized C$175 million of 4.6% medium-term notes due Jan. 15, 2018 on Tuesday, according to a source.

The notes (BBB/BBB) priced at 99.931 to yield 4.61%, for a spread of 196.5 bps over the Canadian benchmark bond. The deal was upsized from C$150 million.

Guidance on the notes was talked at 190 bps plus or minus 5 bps over the relevant Government of Canada bond curve and priced 5 bps tighter at 185 bps versus the curve.

The notes feature a Canada call at 46 bps over the Canadian benchmark bond.

National Bank Financial and Scotia Capital Inc. were the lead managers.

Proceeds will be used to reduce outstanding debt and for general corporate purposes.

AltaGas is an energy company based in Calgary, Alberta.

Paramount to start roadshow

Paramount Resources will start a roadshow on Thursday for its C$250 million offering of senior notes due 2017 (Caa2/B+), according to an informed source.

The roadshow is scheduled to wrap up on Monday.

Scotia Capital and BMO Nesbitt Burns are the joint bookrunners. RBC Capital Markets is the co-lead manager.

The notes come with three years of call protection, a three-year 35% equity clawback and a 101% poison put.

Credit ratings remain to be determined.

The Calgary, Alta.-based oil and natural gas exploration, development and production company will use the proceeds to purchase and/or redeem its 8½% senior notes due 2013, to repay bank debt, for capital expenditures and for general corporate purposes.

OPTI debt still sliding

With the rest of the market in the negative, OPTI Canada paper followed suit, dropping "almost 2 [points]," a trader said.

He saw the 8¼% notes due 2014 at 69¼ and the 7 7/8% notes due 2014 at 681/4.

At another desk, the 8¼% notes were placed at 69 and the 7 7/8% notes at 681/4.

There hasn't been any fresh news out on the Calgary-based oilsands producer since last week, when its Long Lake project partner, Nexen Inc., told Bank of America Merrill Lynch conference attendees that production at the property would likely miss expectations. OPTI later made its own presentation at the conference, in which it said its profitability relied heavily on the project.

A trader said he saw OPTI Canada's 7 7/8% notes due 2014 "go a little lower" on Tuesday, falling to 68 bid, 69 offered, which he called down 1½ points on the day.

Another trader saw OPTI's 8¼% notes due 2014 around that same area, quoting them at 69 bid, 70 offered. He said that "they just can't catch a [bid] yet," adding that he hasn't seen them "down at these levels in a long time," while also quoting the 7 7/8s at 68-69.

Catalyst Paper active

A trader said that Catalyst Paper's bonds "for whatever reason seemed like [they were] all over the lot."

He saw the Richmond, B.C.-based paper company's 11% notes due 2016 at 89 bid, 91 offered, after having been quoted earlier in the day around 88 bid, 88½ offered, "so then they moved back up" to end little changed on the session.

He said there seemed to be "a decent amount of activity, but how much actually traded, you can't tell," because the bonds are among the issues that are not visible on the Trace system.

Valeant down

A trader said that the recent Valeant Pharmaceuticals International 6 7/8% notes due 2018 "didn't do so well," quoting the bonds on Tuesday at 98¾ bid, 99 1/8 offered.

That was a little tighter than the 98 3/8 bid, 99½ offered level seen Monday but down from the 99 bid, 99½ offered level seen when the bonds hit the aftermarket last week.

The Mississauga, Ont.-based drug maker's quickly shopped $1 billion offering - upsized from the originally announced $700 million - had priced late Thursday at 99.24 to yield 7%.

Paul Deckelman, Paul A. Harris and Stephanie N. Rotondo contributed to this review

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