Maple bond activity expected to pick up; Southern Pacific Resource scraps high-yield deal

By Cristal Cody

Prospect News, Dec. 10 - Further issuance of Maple bonds is expected in the weeks ahead of the holidays on the heels of a C$600 million deal sold earlier in the week by Anheuser-Busch InBev Worldwide Inc., an informed source said.

Anheuser-Busch InBev sold C$600 million 3.65% Maple bonds due Jan. 15, 2016 to yield 113 basis points versus the Canadian government bond curve on Wednesday. The offering was upsized from C$500 million.

Maple bonds are Canadian-dollar denominated bonds sold by foreign companies.

Issuance of Maple bonds is on the rise from the previous year, and a few more deals appear to be ahead before the year is out, a source said.

"Last year was a minimal amount," the source said. "There's talk of some financial things so there's a chance we may get something."

Elsewhere on Friday, Southern Pacific Resource Corp. said it wrapped a C$125 million sale of convertible debentures instead of high-yield bonds.

Canadian government bonds were lower on Friday, following the continued sell-off in U.S. Treasuries on stronger economic data. The Canadian 10-year bond yield rose to 3.302% from 3.24%. The two-year bond yield rose to 1.721% from 1.67%.

Statistics Canada said Friday that exports rose 3.1% in October on strength in industrial goods and materials, while imports rose 1.2%.

Also, Canada's trade deficit fell to C$1.71 billion from C$2.31 billion in September.

The U.S. trade deficit also narrowed in October to $38.7 billion from a revised $44.6 billion in September, reflecting an increase in exports, the Commerce Department said Friday. The 10-year Treasury note yield rose 12 basis points to 3.32% on Friday, while the two-year Treasury note yield rose 2 bps to 0.64%.

Southern Pacific prices

Southern Pacific Resource announced Friday it sold C$125 million of 6% convertible unsecured subordinated debentures instead of high-yield bonds as initially planned.

Southern Pacific said the debentures due June 20, 2016 have a face value of C$1,000 per debenture and are convertible into common shares at the option of the holder at a conversion price of C$2.15 per common share.

The debentures were offered for sale in all provinces except Quebec and in the United States under Rule 144A.

BMO Capital Markets Corp., RBC Capital Markers Corp. and Credit Suisse Securities (Canada), Inc. were the lead managers.

Proceeds will be used to fund the development of the company's STP-McKay project, a steam-assisted gravity drainage project, in northern Alberta.

In addition, the company intends to market a second-lien secured term loan facility of up to C$275 million. Bookrunners are Credit Suisse Securities (USA) LLC, RBC Capital Markets Corp., BMO Capital Markets Corp. and TD Securities Inc.

In November, the company said that it intended to sell up to C$300 million of new high-yield debt by the end of the year, though terms had not been finalized.

Calgary, Alta.-based Southern Pacific Resource is a publicly traded oil and gas company.

OPTI falls again

OPTI Canada debt was "cheaper yet again," according to a market source.

He said the bonds had "topped out" on Tuesday at 72 bid, 73 offered. By Friday, both the 7 7/8% and 8¼% notes due 2014 were trading between 69 and 70.

Another trader pegged the 7 7/8% notes at 691/2, down nearly a point, while the 8¼% notes were "almost unchanged, maybe down a little" around 701/2.

Earlier in the week, the Calgary, Alta.-based oil sands producer announced its 2011 capital budget, which showed a 26% increase over 2010's budget. Of its C$150 million plan, C$122 million will be used at the Long Lake Project.

Stephanie N. Rotondo contributed to this review

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