Ontario, Alberta tap market; Glacier Trust sells asset-backed notes; Caterpillar firms

By Cristal Cody

Prospect News, May 24 - Pricing action increased in the Canadian markets on Thursday with bond offerings from Glacier Credit Card Trust and the provinces of Alberta and Ontario.

"Tone is much better," one syndicate source said.

Glacier Credit Card Trust sold C$200 million of five-year senior credit card asset-backed notes in a deal with good demand from 26 buyers, another source said.

"Hearing it looks pretty cheap," the source said.

In the provincial market, the Province of Ontario sold C$750 million in a reopening of the 3.15% 10-year notes, and the Province of Alberta priced C$500 million of new five-year notes.

"We've had a couple of good days in the provincial market," a provincial syndicate source said. "There's been some degree of spread performance as well. In the secondary market yesterday, we were about a ½ basis point tighter across the curve. We're about another ½ to 1 basis point tighter today, so it feels better than it has for sure."

Coming up in the market, an offering of mortgage bonds is expected in early June. Dundee Real Estate Investment Trust and H&R REIT plan to hold a roadshow in Canada the week of May 28 for C$650 million of first mortgage bonds, a source said on Thursday.

"We're definitely seeing supply building up in Canada," the source said.

Also on Thursday, more details from the bond sales from Caterpillar Financial Services Ltd., and VW Credit Canada Inc. emerged.

Caterpillar Financial Services' notes edged about 2 bps tighter in the secondary market on Thursday, a bond source said.

"We're in a smidge," the source said.

The Markit CDX Series 18 North American investment-grade index ended unchanged a third day at a spread of 118 bps.

Government bonds traded better on the short end of the curve. Canada's 10-year note yield fell 1 bp to 1.87%. The 30-year bond yield was flat at 2.4%.

Market activity in Canada on Friday is expected to be light with the U.S. markets closing early ahead of a long holiday weekend.

Glacier Trust taps markets

Glacier Credit Card Trust sold C$200 million of 2.807% five-year senior credit card asset-backed notes (DBRS: AAA) at par, a bond source said.

The series 2012-1 notes due May 19, 2017 priced at a spread of 138 bps over the Canadian bond curve, or 137.5 bps over the government benchmark.

RBC Capital Markets Corp. and Scotia Capital Inc. were lead managers. Co-managers were BMO Capital Markets Corp., CIBC World Markets Inc., TD Securities Inc., HSBC Capital (Canada) Inc. and National Bank Financial Inc.

The notes are backed by credit card receivables from Canadian Tire Bank, a subsidiary of Toronto-based Canadian Tire Corp., Ltd.

Ontario raises C$750 million

The Province of Ontario (Aa2/AA-/DBRS: AA) priced C$750 million in an add-on to its 3.15% 10-year notes at 101.87 to yield 2.933% on Thursday, a bond source said.

The notes due June 2, 2022 priced at a spread of 104 bps over the Government of Canada benchmark.

BMO Capital Markets was the lead manager.

The province initially sold the issue on Nov. 3, 2011 in a C$750 million offering at 99.589 to yield 3.196%, or a spread of 87 bps over the government benchmark.

The province sold C$750 million of the notes in the last reopening on April 30 at 100.472 to yield 3.095%, or 96 bps over the government benchmark. The total outstanding is C$5.25 billion.

Alberta sells C$500 million

Also in the market, the Province of Alberta (Aaa/AAA/DBRS: AAA) sold C$500 million of 1.75% five-year notes at 99.449 to yield 1.865% on Thursday, a bond source said.

The notes due June 15, 2017 came at a spread of 47 bps over the Government of Canada benchmark.

RBC Capital Markets was the lead manager.

Proceeds will be used for general corporate purposes.

Caterpillar Financial prices

Caterpillar Financial Services' notes traded about 2 bps tighter in the secondary market on Thursday, a source said.

Caterpillar Financial sold C$750 million of three-year and five-year medium-term notes (DBRS: A) the previous day.

In the first tranche, Caterpillar Financial sold C$300 million of 2.2% notes due June 1, 2015 at 99.991 to yield 2.203%, or a spread of 95 bps over the Government of Canada benchmark.

The second tranche of C$450 million of 2.63% notes due June 1, 2017 priced at 99.977 to yield 2.635%, or 118 bps over the government benchmark.

TD Securities and RBC Capital Markets were the lead managers.

Burlington, Ont.-based Caterpillar Financial is a subsidiary of Caterpillar Inc.

VW Credit Canada sells notes

Details about VW Credit Canada's offering of C$450 million in two tranches of senior notes (A3/DBRS: A) emerged on Thursday.

The first tranche of C$225 million of 2.5% notes due June 1, 2015 priced at 99.986 to yield 2.505%, or a spread of 128 bps over the Government of Canada benchmark, an informed source said.

A C$225 million tranche of 2.9% notes due June 1, 2017 priced at par to yield 148 bps over the government benchmark.

TD Securities and RBC Capital Markets were lead managers.

The financial service provider for Volkswagen Group Canada dealerships is based in Quebec.

Dundee REIT, H&R REIT eyed

Dundee Real Estate Investment Trust and H&R REIT plan to hold a roadshow in Canada the week of May 28 for an offering of C$650 million of first mortgage bonds, a source said on Thursday.

The roadshow is planned for Toronto and Montreal from Wednesday through June 1.

The bonds (provisional DBRS: A rating) are expected to price at a rate no higher than 3.45%.

Of the debt, C$433.3 million will be allocated to Dundee, the company said in a statement.

Scotia Capital and TD Securities are the bookrunners.

The REITs announced on Tuesday they have purchased Bank of Nova Scotia's Scotia Plaza complex, a high-profile property in downtown Toronto, for C$1.27 billion. Toronto-based Dundee retains a two-thirds interest in the property, while Downsview, Ont.-based H&R REIT holds a one-third stake.

Proceeds will be used to pay for the transaction, which is expected to close on June 20.

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