British Columbia prices $1.5 billion, Ontario sells C$600 million as corporates pause

By Cristal Cody

Prospect News, April 18 - Canadian provinces of British Columbia and Ontario brought deals in the Canadian and U.S. bond markets on Wednesday.

In Canada, the Province of Ontario sold C$600 million in a reopening of the 3.5% bonds due June 2, 2043.

"These are a series of bonds that were originally issued in Canada this year," a bond source said.

In the U.S. high-grade market, the Province of British Columbia sold $1.5 billion of bonds in two tranches.

Also in the U.S. market, Ontario reopened its issue of floating-rate medium-term notes due in April 2015 to add $250 million, according to FWP filings with the Securities and Exchange Commission.

A corporate offering expected in Canada from BAA Airports Ltd., which wrapped its two-day roadshow on Tuesday, may not come until later in the month, a source said.

BAA Airports reports its first-quarter earnings results on April 25.

"They typically don't [issue] during blackout periods," the source said.

Bank of America Merrill Lynch, CIBC World Markets Inc. and RBC Capital Markets Corp. are the managers.

London-based BAA owns airports that include Heathrow, Glasgow and Edinburgh airports.

The corporate bond markets were "pretty stable" on Wednesday, according to a bond source.

"Yesterday there was a huge rally in the equity market. Today, everything is holding in," the source said.

The Markit CDX Series 18 North American investment-grade index was flat at a spread of 99 bps.

Government bonds traded better ahead of Spain's bond auctions on Thursday. Canada's 10-year note yield edged 1 bp lower to 2.04%. The 30-year bond yield fell 2 bps to 2.58%.

British Columbia prices

The Province of British Columbia sold $1.5 billion of bonds (Aaa/AAA/AAA) in two parts on Wednesday, a market source said.

There was a tranche of $1.25 billion 1.2% five-year notes priced at 99.927 to yield 1.215% with a spread of mid-swaps plus 8 bps.

The province also reopened its issue of 2.65% notes due in September 2021 to add $250 million. These reopened notes priced at 103.022 to yield 2.91% with a spread of mid-swaps plus 28 bps or Treasuries plus 31 bps.

Total issuance is $1 billion, including $750 million priced on Sept. 15, 2011 at mid-swaps plus 40 bps or Treasuries plus 57.95 bps.

All of the paper is non-callable.

CIBC World Markets Corp., HSBC Securities (USA) Inc., RBC Capital Markets LLC and Scotia Capital (USA) Inc. were the bookrunners.

Proceeds are being added to the Consolidated Revenue Fund of British Columbia.

Ontario retaps long bonds

The Province of Ontario (Aa1/AA-/DBRS: AA) sold C$600 million in a reopening of the 3.5% bonds due June 2, 2043 at 97.331 to yield 3.644% in Canada's bond market on Wednesday, a bond source said.

The bonds priced at a spread of 104 bps over the Government of Canada benchmark.

CIBC World Markets was the lead manager.

The province originally sold the issue on Jan. 26 in a C$600 million offering at 99.187 to yield 3.543%, or 88 bps over the Government of Canada benchmark.

The issue was last reopened earlier in the month on April 11 to sell C$600 million of the bonds at 98.30 to yield 3.591%, or a spread of 100.5 bps over the Government of Canada benchmark.

The province originally sold the issue on Jan. 26 in a C$600 million offering at 99.187 to yield 3.543%, or 88 bps over the Government of Canada benchmark.

The total outstanding now is C$3.3 billion.

Ontario reopens floaters

In the U.S. market, the Province of Ontario reopened its issue of floating-rate medium-term notes due April 2015 to add $250 million, according to FWP filings with the SEC.

The notes (Aa1/AA-/) were sold at par plus accrued and unpaid interest with a coupon of Libor plus 15 bps.

Total issuance is $750 million, including $350 million issued on Feb. 29, $100 million priced on April 13 and $50 million added on April 16.

Agents were Bank of America Merrill Lynch and Scotia Capital.

Andrea Heisinger contributed to this review

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