Enbridge, 407 International sell upsized deals; Fair primary action likely; 407 bonds firm

By Cristal Cody

Prospect News, Nov. 14 - Monday kicked off with two debt deals in the Canadian markets.

Enbridge Inc. priced C$450 million of preferred shares, and 407 International Inc. raised C$350 million of 30-year senior bonds.

Both deals were upsized, with Enbridge increasing its deal by C$150 million and 407 International adding $100 million, according to sources.

Deal activity is likely to stay muted over the week, according to sources.

"We've seen a fair number of utility issues recently and long-dated issues, but there's not a massive lineup of companies out there waiting to do it," one high-grade bond source said. "We expect issuance to be moderate - not nonexistent but not heavy for this week."

Canada Housing Trust may be in the market this week with its quarterly Canada mortgage bond deal. The trust is expected to price five-year floating-rate notes and fixed-rate bonds due 2022.

Canada's high-yield deals priced in late October and this month from Sherritt International Corp., Newalta Corp., Ford Credit Canada Ltd. and Cara Operations Ltd. have been easily absorbed, a source said. But expectations for additional high-yield issuance for the remainder of the year are low, the source said.

In the secondary market, 407 International's new bonds due 2041 edged tighter.

"It traded in a basis point or two," a source said.

Corporate bonds were mostly flat on Monday. The Markit CDX Series 17 North American high-grade index ended unchanged at a spread of 130 basis points.

Canadian government bonds traded higher along with U.S. Treasuries on continued overseas euro zone debt fears. The 10-year note yield fell 2 bps to 2.11%. The 30-year bond yield was down 1 bp at 2.74%.

Enbridge sells preferreds

Enbridge (Baa3/BBB/DBRS: Pfd-2) sold an upsized C$450 million of cumulative redeemable preference shares that yield 4% annually for the initial period ending March 1, 2018, the company said in a statement.

Enbridge sold 18 million shares of series D preferred stock at a price of C$25.00 per share.

The deal was upsized from C$300 million, or 12 million shares.

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

Proceeds will be used to partially fund capital projects, to reduce existing debt and for general corporate purposes.

Enbridge is a Calgary, Alta.-based oil and gas distributor and transportation company.

407 International prices

In Canada's bond market, 407 International priced C$350 million of 4.45% 30-year senior notes (DBRS: A) at 99.885 to yield 4.457% on Monday, a bond source said.

"It came out initially with a minimum of C$250 million, but it was expected to grow, and it did," a source said.

The series 11-A1 bonds due Nov. 15, 2041 priced at a spread of 170 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. was the lead manager. Co-managers were RBC Capital Markets Corp., Casgrain & Co. Ltd., CIBC World Markets Inc., National Bank Financial Inc., Scotia Capital Inc. and TD Securities Inc.

Proceeds will be used to repay the company's C$300 million outstanding of 4.65% series 09-A1 senior bonds due on Jan. 20, 2012 on maturity or redemption and for general corporate purposes.

In the secondary market, the new long bonds traded in about 1 bp to 169 bps bid, 166 bps offered, a source said.

The Woodbridge, Ont.-based toll highway operator is owned by a consortium that includes Cintra Infraestructuras, Intoll, SNC-Lavalin Inc. and the Canada Pension Plan Investment Board.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.