Genworth MI Canada sells C$150 million 4.59% five-year notes; bonds rally on U.S. markets

By Cristal Cody

Prospect News, Dec. 13 - Genworth MI Canada Inc. priced C$150 million of 4.59% five-year debentures at par in the lone deal in the Canadian bond markets on Monday, sources said.

"It's very quiet," one source said. "It's winding down. It's the last week of activity before the Christmas holiday."

One new deal from Quebecor Media Inc. is expected to price this week. The company started a roadshow for C$250 million of senior unsecured notes due Jan. 15, 2021 on Monday, an informed source said.

Meanwhile, Canadian government bonds reversed Friday's losses following U.S. Treasury and corporate bond markets, a source said.

"A lot of it has to do with new issuance in the U.S. There's a great blocking ahead of the Build America Bond issues," the source said. "The program ends on Dec. 31 so a lot of states are rushing to get their deals done. There was a lot of hedging activity and that was unwound today, which caused Treasuries to rally."

The Canadian 10-year bond yield fell to 2.022% from 3.32%. The two-year bond yield fell to 1.677% from 1.74%. Bond yields fall as their prices rise.

Treasuries rallied after the Federal Reserve purchased $7.79 billion of bonds as part of its $600 billion buyback program to boost the U.S. economy.

The yield on the 10-year Treasury benchmark note fell to 3.28% from 3.32% on Friday. The two-year yield dropped 5 basis points to 0.59%.

No U.S. economic data was released on Monday.

Statistics Canada said Monday that Canadian industries operated at 78.1% of their production capacity in the third quarter, up from 76.9% in the second quarter and the fifth consecutive increase since the record low rate of 67.8% in the second quarter of 2009.

In addition, national net worth rose 0.7% to $6.3 trillion in the third quarter.

Genworth MI Canada prices

Genworth MI Canada sold its five-year debentures at a spread of 208.8 bps over the Government of Canada benchmark bond. Guidance on the bonds was in the area of 208 bps over the Canadian benchmark.

Scotia Capital Inc., RBC Capital Markets Corp. and TD Securities Inc. were the lead managers. Co-managers were BMO Capital Markets Corp., National Bank Financial, CIBC World Markets Inc., Desjardin Securities Inc. and Macquarie Capital Markets Canada Ltd.

The Oakville, Ont.-based company supplies private sector mortgage default insurance in Canada.

Quebecor Media holds roadshow

Quebecor Media's roadshow started in Toronto on Monday and continues Tuesday in Montreal.

The notes will be sold under Rule 144A.

Scotia Capital Inc., TD Securities Inc. and National Bank Financial Inc. are the lead managers.

The notes will have a change-of-control put at 101%.

Proceeds will be used by subsidiary Sun Media Corp. to redeem and retire all outstanding Sun Media notes in February and to finance the settlement and termination of related hedging contracts.

Montreal-based Quebecor Media is a subsidiary of Quebecor Inc., one of Canada's largest communications and media companies.

Catalyst Paper active

In the secondary market, a trader said that Catalyst Paper Corp. "traded a bit today," seeing the Richmond, B.C.-based paper manufacturing company's 7 3/8% notes due 2014 ending at 71 bid, 71½ offered, while its 11% senior secured notes due 2016 closed right at 94 bid.

The latter bonds were "just up a little bit," gaining ¼ to ½ point, "but there was some activity in the name," he said.

OPTI Canada dips

A trader saw OPTI Canada's 7 7/8% senior secured second-lien notes due 2014 ending around 69 bid, 70 offered, which he called down about ½ point.

The trader said there was "not a whole lot of movement" in the Calgary, Alta.-based oil sands energy company's bonds and "not much activity."

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