IBRD sells three-year notes; 407 International prices 30-year bonds; RTL-Westcan weakens

By Cristal Cody

Prospect News, April 20 - After a lull in new corporate deals late in the week, the International Bank for Reconstruction and Development and 407 International Inc. brought deals in the Canadian bond markets on Friday.

The International Bank for Reconstruction and Development raised C$400 million of three-year notes and 407 International sold C$400 million of 30-year bonds in a quick offering.

"The IBRD was in the market for a bit, but the 407 certainly wasn't," one source said.

A corporate bond deal is expected in the week ahead from BAA Airports Ltd., which held a roadshow in Canada on Monday and Tuesday.

Bank of America Merrill Lynch, CIBC World Markets Inc. and RBC Capital Markets Corp. are the managers.

The London-based operator of Heathrow, Glasgow and Edinburgh airports reports first-quarter earnings on Wednesday.

The provinces of Quebec, Ontario and British Columbia also are expected to be in the market in the upcoming week.

Market tone seemed "OK" for the day, a source said on Friday.

The Markit CDX Series 18 North American investment-grade index was flat at a spread of 100 basis points.

In the secondary market, 407 International's bonds "went a little wider, then it came back," a bond source said.

The bonds due 2042 traded flat at new issue price going out.

In Canada's high-yield market, RTL-Westcan LP's 9½% senior secured notes due 2017 traded lower.

Secondary trading over the week was choppy.

"We've made up some ground from where we were at the end of last week," a source said. "We're tighter from last week, that's for sure, but it's been kind of choppy."

On Friday, government bonds traded weaker ahead of upcoming key European and U.S. meetings. Canada's 10-year note yield rose 1 bp to 2.06%. The 30-year bond yield closed 2 bps higher to 2.61%.

Statistics Canada said in a report that Canada's consumer prices rose 1.9% in March, compared to a 2.6% rise in February. In a separate report, the agency said the composite leading index rose 0.4% in March, down from a 0.7% increase in February.

IBRD prices C$400 million

The International Bank for Reconstruction and Development (Aaa/AAA/) priced C$400 million of 1.7% three-year notes at 99.959 to yield 1.714% on Friday, according to an informed bond source.

The notes due April 30, 2015 priced at a spread of 25 bps over the Government of Canada benchmark.

RBC Capital Markets was the bookrunner.

The Washington, D.C.-based arm of World Bank Group provides loans to developing countries.

407 sells 30-year notes

407 International tapped the Canadian market for C$400 million of 4.19% 30-year senior secured medium-term notes (DBRS: A) at 99.864 to yield 4.198% on Friday, a bond source said.

The series 12-A1 notes due April 25, 2042 priced at a spread of 156 bps over the Canadian government benchmark.

BMO Capital Markets Corp. and RBC Capital Markets were the lead managers.

Proceeds will be used to redeem the company's $200 million outstanding of 5.1% senior notes, series 09-A2, due Jan. 20, 2014 and for general corporate purposes.

407 International was last in the Canadian bond market on Nov. 13. The company sold C$350 million of 4.45% 30-year senior bonds (DBRS: A) at 99.885 to yield 4.457%, or a spread of 170 bps over the Government of Canada benchmark.

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

RTL-Westcan lower

In the secondary market, RTL-Westcan's 9½% senior secured notes due 2017 (/B+/DBRS: BB) traded at 104 bid on Friday, down from 104.75 at the start of the month, a high-yield bond source said.

The notes priced in a C$130 million offering at par in 2010.

The Edmonton, Alta.-based company operates a transport business in Alberta, British Columbia, Saskatchewan, Yukon and the Northwest Territories.

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