Enbridge sells two tranches; Banro plans U.S. dollar deal; Flint Energy notes trade up

By Cristal Cody

Prospect News, Feb. 21 - Enbridge Income Fund started off the week's primary activity in the Canadian bond markets on Tuesday with the sale of C$500 million in two tranches of medium-term notes.

About 50 institutional investors purchased the seven-year tranche, an informed source said.

"Following up on some initial investor interest, EIF also priced a 10 year, $200 million tranche, which saw participation from 30 institutional accounts," the source said.

In the U.S. investment-grade market on Tuesday, Methanex Corp. sold $250 million of 5.25% 10-year senior notes.

Toronto-based gold miner Banro Corp. also is expected to be in the U.S. high-yield market later in the week with an offering of $125 million of five-year notes with warrants, an informed bond source said.

"That's going well; we've had some good feedback," the source said.

In the secondary market, Flint Energy Services Ltd.'s bonds (B2/BB-) jumped in trading on the news URS Corp. will acquire the Canadian energy company for C$1.2 billion in cash and the assumption of C$225 million of debt.

High-yield bonds overall are "trading OK these days," one source said. "We're still at a point where we need product."

Canadian government bonds traded lower on Tuesday. The 10-year note yield ended 2 basis points higher at 2.09%. The 30-year bond yield rose 1 bp to 2.66%.

Enbridge upsizes

Enbridge Income Fund raised an upsized C$500 million in two tranches of medium-term notes (Baa2/DBRS: BBB) on Tuesday, an informed bond source said.

Enbridge sold C$300 million of 4.1% seven-year notes at 99.808 to yield 4.132%, or a spread of 235 bps over the Canadian bond curve.

The notes due Feb. 22, 2019 are redeemable at 58.5 bps over the Canadian benchmark.

In the second tranche, Enbridge priced C$200 million of 4.85% 10-year notes at 99.875 to yield 4.866%, or 270 bps over the bond curve. The notes due Feb. 22, 2022 have a call feature at 67.5 bps over the Canadian benchmark.

CIBC World Markets Inc., BMO Capital Markets Corp. and National Bank Financial were the lead managers.

Enbridge was last in the market in December with an offering of C$125 million of 4% medium-term notes due 2018, which priced at par.

Calgary, Alta.-based Enbridge Income Fund focuses on investments in energy infrastructure assets.

Methanex sells notes

Methanex priced $250 million of 5.25% 10-year senior notes on Tuesday to yield 325 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.

The deal was priced tighter than guidance in the 337.5 bps area.

The notes (Ba1/BBB-/) were sold at 99.615 to yield 5.3%.

There is a make-whole call at 50 bps over Treasuries, and the notes feature a change-of-control put at 101%.

BNP Paribas Securities Corp. and RBS Securities Inc. were the bookrunners.

Co-managers were J.P. Morgan Securities LLC, RBC Capital Markets LLC and CIBC World Markets.

Proceeds are being used for debt repayment, working capital and general corporate purposes.

In the secondary market, the notes came in to 300 bps bid, 295 bps offered, a trader said.

The worldwide supplier of methanol is based in Vancouver, B.C.

Banro offers high-yield notes

Canada's Banro is expected to price $125 million of five-year notes with warrants whispered in the area of 10%, an informed bond source said on Tuesday.

Each share includes 48 warrants.

The deal is unrated and has modest room to grow.

The issue is non-callable for two years.

A roadshow for the offering starts on Wednesday, and pricing is expected on Friday.

GMP Securities LP and BMO Capital Markets are the bookrunners.

Banro is a Toronto-based gold mining company.

Flint Energy trades up

Flint Energy's 7½% senior notes due 2019 traded higher over the day on the deal news.

"Trading at 107, 109 right now," one bond source said.

Another source saw the notes at 107.25 bid.

On Friday, Flint Energy's notes were quoted at 101.75 bid.

Flint sold C$175 million of the notes due 2019 on May 25, 2011 at 99.

Flint's acquisition by San Francisco-based URS is expected to close in the second quarter. Flint Energy shareholders will vote on the takeover on April 3.

Market analysts say a competing bid is unlikely.

Because of the acquisition, Moody's Investors Service has placed Flint Energy's ratings on review for upgrade.

The Calgary, Alta.-based company provides products and services to the oil and gas industries.

Andrea Heisinger contributed to this review

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