ScotiaPlaza, Finning do sales ahead of euro zone events; Nevada Gold, Canadian Satellite rise

By Cristal Cody

Prospect News, June 8 - The Canadian markets ended Friday with two bond offerings from ScotiaPlaza and Finning International Inc., capping a week of domestic deals that also included sales by GE Capital Canada Funding Co. and the provinces of Alberta, Ontario and Quebec.

ScotiaPlaza, or SP Limited Partnership and SP1 Limited Partnership, brought its expected offering of C$650 million of 3.21% amortizing first mortgage bonds on Friday. The bonds broke 0.5 basis point tighter in secondary trading, a source said.

Finning International also tapped the investment-grade market for C$150 million of long bonds.

The Canadian markets saw C$1.35 billion of corporate offerings and C$1.75 billion of provincial deals over the week.

"People wanted to get done before the weekend," a corporate syndicate source said. "No one's sure what's happening in Europe. But we expect some issuance next week. There were only three deals this week - a billion [dollars next week] wouldn't shock me."

Another bond source agreed.

"There will always be money for good names," the source said. "I suspect there'll probably be a couple more on the corporate side."

High-grade bonds traded mostly flat. The secondary market "opened a little wider in the morning but they're unchanged," a source said.

The Markit CDX Series 18 North American investment-grade index firmed 1 bp on the day to an average spread of 121 bps.

High-yield bonds edged higher. The Markit CDX Series 18 North American high-yield index rose to 94.47 on Friday from 94.03 on Thursday.

Allied Nevada Gold Corp.'s 8.75% notes due 2019 traded up about 0.25 point on the week, a high-yield bond source said on Friday.

Canadian Satellite Radio Holdings Inc.'s 9.75% senior notes due 2018 are better by ½ point.

The 11.5% senior secured notes due 2017 from Cash Store Financial Services Inc. dropped 1 point on the week.

Government bonds ended the day better. Canada's 10-year note yield fell 2 bps to 1.81%. The 30-year bond yield edged 1 bp lower to 2.37%.

Canada's employment was flat in May following two months of gains, Statistics Canada said. The unemployment rate remained unchanged at 7.3%.

ScotiaPlaza sells C$650 million

ScotiaPlaza sold C$650 million of 3.21% amortizing first mortgage bonds at par on Friday, an informed bond source said.

The bonds due June 15, 2019 (DBRS: A rating) priced at a spread of 180 bps over the Government of Canada benchmark.

Scotia Capital Inc. and TD Securities Inc. were the bookrunners.

The SP and SP1 Limited partnerships are subsidiaries of Dundee Real Estate Investment Trust and H&R REIT. The REITs announced in May they purchased Bank of Nova Scotia's Scotia Plaza complex in Toronto for C$1.27 billion and will use proceeds from the bond sale to help fund the acquisition, which is expected to close on June 20.

Toronto-based Dundee has a two-thirds stake in the property, and Downsview, Ont.-based H&R REIT holds a one-third interest.

Finning sells C$150 million

Finning International (/BBB+/DBRS: A) raised C$150 million in an offering of 5.077% medium-term notes priced at par on Friday, according to an informed source.

The notes due June 13, 2042 priced at a spread of 272 bps over the Government of Canada benchmark.

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

Proceeds will be used to repay outstanding debt, including under existing credit facilities or the company's commercial paper program. Finning also may temporarily invest the proceeds until its acquisition of the Canadian portion of a subsidiary of Caterpillar Inc. closes in the third quarter and then use the proceeds to directly pay a portion of the purchase price for the acquisition.

The heavy equipment dealer is based in Vancouver, B.C.

Allied Nevada Gold rises

In Canada's secondary market, Allied Nevada Gold's 8.75% senior notes due 2019 traded on Friday at 99 bid, up about 0.25 point on the week, according to a bond source.

The company sold C$400 million of the seven-year notes (B3/B/) at 98.716 to yield 9% on May 18.

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

Canadian Satellite better

Canadian Satellite Radio Holdings' 9.75% senior notes due 2018 rose to 108.75 bid on Friday, up ½ point on the week, a bond source said.

Canadian Satellite Radio, which was created through the merger of XM Canada and Sirius Canada, sold C$62 million of the notes on March 31, 2011 at par.

The satellite radio and communications company is based in Toronto.

Cash Store falls

Cash Store's 11.5% senior secured notes due 2017 fell to 93 bid in secondary trading on Friday, down a point on the week, a source said.

The company sold C$132.5 million of 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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