American Express Canada, Manitoba Telecom bring deals; bonds not 'leading the charge'

By Cristal Cody

Prospect News, Sept. 27 - Three new deals from Hydro-Quebec, American Express Canada Credit Corp. and Manitoba Telecom Services Inc. priced in the Canadian bond markets as credit tone improved on Tuesday, informed bond sources said.

Hydro-Quebec raised C$500 million in a reopening of its 5% long bonds on Tuesday, while American Express Canada Credit sold C$200 million in an add-on to its 3.6% five-year notes.

Manitoba Telecom Services, which had a C$220 million maturity due on Tuesday, priced C$200 million of 4.25% seven-year notes, an informed bond source said.

More bond offerings may come over the week if the markets stay stable on Wednesday, sources said.

"Tone's better but it's still going to take a while to get fixed income investors convinced," a bond source said. "It's only been three business days since the world was ending."

Trading was volatile and government bond yields dropped to historic lows the previous week on global growth fears. Market tone improved on Tuesday as talks continued in Europe on Greece's debt bailout plan.

"Equities seem to be on a robust roll," a source said. "Credit's tighter over the last few days, but as far as leading the charge, it feels like it's being dragged along."

The Markit CDX Series 17 North American high-grade index firmed 1 basis point to a spread of 136 bps on Tuesday.

In the secondary market, American Express Canada Credit's notes traded about 4 bps tighter from the 200 bps issue spread, a source said.

"Currently trading at 196 [bps bid], 191 [bps offered]," the source said.

Canadian government bonds were mostly flat on Tuesday. The 10-year note yield was unchanged at 2.19%. The 30-year bond yield rose 2 bps to 2.82%.

Hydro-Quebec reopens bonds

Hydro-Quebec announced that it sold C$500 million in a reopening of its 5% long bonds on Tuesday.

The series JN debentures due Feb. 15, 2050 (Aa2//AA-/DBRS: A) priced at 121.978 to yield 3.892%.

National Bank Financial Inc. was the bookrunner. Scotia Capital Inc. and TD Securities Inc. were co-lead managers.

The issue is the eighth additional tranche of the issue, which originally was priced on Jan. 15, 2009. Hydro-Quebec last reopened the issue at the start of the year on Jan. 19 in a C$500 million add-on priced at 107.145 to yield 4.604%.

The total outstanding is C$4.5 billion.

Hydro-Quebec is a government-owned corporation, which generates, transmits and distributes electricity in Quebec.

American Express prices

American Express Canada Credit sold C$200 million in a reopening of the 3.6% five-year medium-term notes (A2/BBB+/DBRS: A) at 100.574 to yield 3.465% on Tuesday, an informed bond source said.

The notes due June 3, 2016 priced at a spread of 200 bps over the Government of Canada benchmark.

Bank of America Merrill Lynch and TD Bank Securities Inc. were the lead managers.

The company originally sold C$400 million of the notes on June 1 at a spread of 135 bps over the Canadian government benchmark.

American Express Canada is a division of the New York-based credit card company American Express Co.

Manitoba Telecom prices

Also in the market, Manitoba Telecom Services raised C$200 million of 4.25% seven-year medium-term notes (/BBB/DBRS: BBB) at 99.988 to yield 4.592% on Tuesday, an informed bond source said.

The notes due Oct. 1, 2018 were sold at a spread of 275 bps over the Government of Canada benchmark.

The notes include a "long first coupon, given the last day is Sunday on Sept. 30, 2018," the source noted.

CIBC World Markets Inc. and BMO Capital Markets Corp. were the lead managers.

Proceeds will be used to refinance the company's Sept. 27, 2011 medium-term note maturity.

The telecommunications company is based in Winnipeg, Man.

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