Alberta prices C$720 million 10-year notes; Brookfield sells preferreds; Enbridge firms

By Cristal Cody

Prospect News, Aug. 23 - Market activity on Thursday in the Canadian bond markets included a C$720 million offering of 10-year notes from the Province of Alberta and a C$200 million preferred stock deal from Brookfield Asset Management Inc.

Deals are "trickling" in across the Canadian markets over August, typically a quiet month for primary activity, a source said on Thursday.

High-yield primary issuance also has been light in the Canadian markets and probably will stay so for the next couple of months, a syndicate source said.

"It's quiet, the doldrums of August," the source said. "There's a couple [ahead], maybe October, November."

In the secondary market, Enbridge Inc.'s high-grade 30-year bond offering sold on Wednesday traded marginally tighter.

Bonds overall traded weaker on the day.

The Markit CDX Series 18 North American investment-grade index eased 3 basis points to a spread of 102 bps.

The Markit CDX Series 18 North American high-yield index closed lower at 97.92 from 98.41.

Government bonds, which rallied on Wednesday, continued to trade better on Thursday.

Canada's 10-year note yield fell 2 bps to 1.82%. The 30-year bond yield dropped 1 bp to end at 2.40%.

"Yesterday, we had a rally of 10 basis points in the belly of the curve," a bond source said. "We followed that a little bit today, but not much. There was no domestic news in the Canadian market, so mostly we were trading on the back of developments abroad."

Alberta raises C$720 million

In the provincial offering on Thursday, Alberta (Aaa/AAA/DBRS: AAA) sold C$720 million of 2.55% 10-year notes at 99.714 to yield 2.582%, according to an informed bond source.

The notes due Dec. 15, 2022 priced at a spread of 78 bps over the Government of Canada benchmark.

TD Securities Inc. was the lead manager.

Brookfield taps market

Elsewhere in the Canadian markets, Brookfield Asset Management announced that it priced C$200 million of preferred shares that yield a 4.2% annual dividend for the initial period ending March 31, 2019.

Brookfield sold 8 million shares of the series 34 class A preferred stock (DBRS: Pfd-2) at C$25.00 per share.

After the initial seven-year period, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 263 bps.

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

The deal includes an over-allotment option of C$50 million, or 2 million shares.

Proceeds will be used to redeem Brookfield's series 11 class A preference shares and for general corporate purposes.

Toronto-based Brookfield Asset Management is a global alternative asset manager with more than $150 billion of property, power and infrastructure assets under management.

Enbridge better

Enbridge's 4.24% 30-year medium-term notes traded better at 179 bps bid in the secondary market after the notes priced the previous day, according to a bond source.

Enbridge sold C$400 million of notes due Aug. 27, 2042 (Baa1/A-/DBRS: A) at 99.932 to yield 4.244%, or a spread of 180 bps over the Government of Canada benchmark.

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

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