Toronto-Dominion, 407 International bring deals; Cards II Trust, HudBay tap U.S. markets

By Cristal Cody

Prospect News, Sept. 6 - Toronto-Dominion Bank led Canadian deal activity on Thursday with a C$600 million sale of mortgage-backed securities as credit tightened following the European Central Bank bond buying program announcement.

In corporate deals in Canada, 407 International Inc. priced C$200 million of 40-year senior secured medium-term notes, while Intact Financial Corp. detailed its reopening of 5.16% 30-year medium-term notes.

Cards II Trust priced a U.S. dollar-denominated offering of $1 billion of five-year credit card receivables-backed floating-rate notes, as well as a Canadian dollar-denominated tranche of series 2012-4 class B notes (Baa1/BBB/DBRS: BBB) that were not sold publicly.

Also in the U.S. market, Toronto-based HudBay Minerals Inc. priced an upsized $500 million issue of eight-year notes.

"It was expected to pick up," one syndicate source said of the deal calendar.

Friday also likely will see deal action, a source said. Key Canadian and U.S. job data for August will be released early on Friday.

"It's a Friday and nonfarm payroll day, which sometimes can be a little bit slow, but I don't think it will slow down issuance in Canada unless the number is a complete disaster," the bond source said.

Corporate bonds traded stronger on the European Central Bank's plan to help the overseas debt crisis.

The market is "still very firm - in great shape after the ECB announcement," a source said.

The Markit CDX Series 18 North American investment-grade index firmed 6 bps to a spread of 95 bps.

The Markit CDX Series 18 North American high-yield index rose to 99.52 from 98.38.

Canadian government bonds ended lower with yields up across the curve as investors moved into riskier assets. The 10-year note yield closed up 8 bps to 1.84%. Canada's 30-year bond yield closed higher at 2.4% from 2.33% on Wednesday.

TD Bank sells C$600 million

Toronto-Dominion Bank raised C$600 million in an offering of 1.7% five-year Canada Mortgage and Housing Corp. National Housing Act mortgage-backed securities at 98.263 to yield 2.14% on Thursday, an informed bond source said.

The notes due Aug. 1, 2017 have a weighted average life of 4.016 years and priced at a spread of 78 bps over the comparable Canadian government 2016 benchmark.

TD Securities Inc. was the bookrunner.

The bank and financial services company is based in Toronto.

407 returns to market

407 International priced C$200 million of 3.98% 40-year senior secured medium-term notes (/A/DBRS: A) at 99.861 to yield 3.987% on Thursday, according to an informed bond source.

The series 12-A2 notes due Sept. 11, 2052 priced at a spread of 160 bps over the Government of Canada benchmark.

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

The notes have a Canada call at 40 bps over the Canada bond yield and a call at par three months prior to maturity.

Proceeds will be used for general corporate purposes.

407 International last tapped the Canadian debt markets on April 20. The company sold C$400 million of 4.19% 30-year senior secured medium-term notes at 99.864 to yield 4.198%, or a spread of 156 bps over the Canadian government benchmark.

The company is a Woodbridge, Ont.-based toll highway operator.

Cards II sells $1 billion

Cards II Trust priced a U.S. dollar-denominated offering of $1 billion of five-year credit card receivables-backed floating-rate notes (Aaa/AAA/DBRS: AAA) at par to yield one-month Libor plus 45 bps on Thursday, according to a bond source.

The series 2012-4 class A notes due Sept. 15, 2017 have a weighted average life of 1.9 years.

The class A notes priced under Rule 144A and Regulation S.

Cards II Trust also came with a Canadian dollar-denominated tranche of series 2012-4 class B notes (Baa1/BBB/DBRS: BBB) that were not sold publicly.

CIBC World Markets, Bank of America Merrill Lynch and HSBC Capital (Canada) Inc. were the bookrunners.

Proceeds will be used by the trust to finance the purchase of an undivided co-ownership interest in the receivables of certain credit card accounts designated by Canadian Imperial Bank of Commerce.

Cards II Trust owns interests in credit card receivables originated and serviced by Canadian Imperial Bank of Commerce.

HudBay sells $500 million

Nearly four months after postponing a similarly structured $400 million deal due to market conditions, Toronto-based HudBay Minerals returned on Thursday to price an upsized $500 million issue of eight-year notes (B3/B) at par to yield 9½%, according to an informed source.

Thursday's deal was upsized from $400 million.

The yield printed at the wide end of the 9 3/8% to 9½% yield talk.

Bank of America Merrill Lynch ran the books for the quick-to-market issue.

The integrated mining company plans to use the proceeds for general corporate purposes and to fund the development of its Lalor and Reed projects in Manitoba and its Constancia project in Peru.

Paul A. Harris contributed to this review

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