First Capital Realty brings deal; Allied Nevada Gold, Air Canada paper up; Connacher down

By Cristal Cody

Prospect News, May 25 - Friday saw light pricing action in Canada with a bought-deal offering from First Capital Realty Inc., while the U.S. markets closed early for a three-day holiday weekend.

First Capital Realty sold C$100 million of 10-year senior debentures.

Primary activity in the corporate and provincial markets is expected in the week ahead, sources said.

"We will probably see something next week, probably Tuesday because of the holiday in the U.S.," one bond source said.

The U.S. markets will be closed on Monday for the Memorial Day holiday.

Corporate bonds held in over the week after a strong start on Monday. The Markit CDX Series 18 North American investment-grade index ended Friday unchanged at a spread of 118 basis points.

In the secondary market, Allied Nevada Gold Corp.'s bonds are higher since the issue priced a week ago, a high-yield bond source said.

Air Canada Inc.'s bonds are up ½ a point in trading from a week ago.

Ford Credit Canada Ltd.'s notes also traded stronger on the week.

Weaker paper included Connacher Oil & Gas Ltd., down 1¼ points, and Cash Store Financial Services Inc., off 1 point.

Canadian government bonds traded higher on the day, tracking U.S. Treasury gains on overseas fears. Canada's 10-year note yield dropped 7 bps to 1.80%. The 30-year bond yield fell 5 bps to 2.35%.

First Capital Realty prices

In the bought deal seen early Friday, First Capital Realty priced C$100 million of 4.43% 10-year senior debentures at 100.372 to yield 4.383%, a source said.

The series O debentures due Jan. 31, 2022 (expected Baa3//DBRS: BBB) priced at a spread of 258.7 bps over the Canadian government benchmark.

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

Proceeds will be used for development and redevelopment activities, for acquisitions and for general corporate purposes.

First Capital Realty was in the market last with an offering of debentures on March 28. The real estate developer sold C$175 million of 4.5% series N senior debentures due March 1, 2021 (Baa3/DBRS: BBB) at 100.084 to yield 4.489%, or 237.3 bps over the Government of Canada benchmark.

Toronto-based First Capital Realty owns, develops and operates supermarket- and drugstore-anchored shopping centers in Canadian metropolitan areas.

Allied Nevada Gold higher

In Canada's secondary market, Allied Nevada Gold's 8¾% senior notes due June 1, 2019 rose to 98.875 bid on Friday, up from the issue price of 98.716 a week ago, a high-yield bond source said.

Allied Nevada Gold sold C$400 million of the notes (B3/B/) to yield 9% on May 18.

The company announced on Friday that the deal has closed.

Reno, Nev.-based Allied Nevada Gold is a gold mining and exploration company.

Air Canada rises

Air Canada's 10 1/8% senior secured first-lien notes due 2015 rose to 97.5 bid on Friday, about ½ point better from a week ago, a bond source said.

The company sold C$300 million of the notes (B2/B+) at 99.046 on July 27, 2010.

The issue's next call date is on Aug. 1. The 10 1/8% notes have a call price of 107.594.

The airline is based in Montreal.

Ford Credit Canada better bid

Also in trading, Ford Credit Canada's 4 7/8% notes due 2017 rose 1½ points over the week to 104.25 bid, according to a bond source.

Ford Credit Canada sold C$500 million of the five-year notes (Ba1/BB+/DBRS: BB) at par to yield 4 7/8% on Feb. 1.

Ford Credit Canada is the Canadian financing arm of Ford Motor Co.

Connacher falls

In weaker trading, Connacher's 8¾% senior notes due 2018 were seen Friday at 97 bid, more than a point lower from a week ago, a source said.

The issue priced on May 20, 2011 at par.

Connacher is underway in a strategic review. The company rejected an unsolicited takeover offer in December.

The integrated oil company is based in Calgary, Alta.

Cash Store drops

Cash Store's 11½% senior secured notes due 2017 fell to 94 bid in secondary trading, a point lower on the week, a source said on Friday.

The company sold C$132.5 million of the notes (B3/B/) at 94.608 on Jan. 24.

Edmonton, Alta.-based Cash Store Financial provides broker and short-term lending services.

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