Canadian markets quiet ahead of U.S. break; deals eyed before end of week; Athabasca flat

By Cristal Cody

Prospect News, Nov. 21 - Canadian market activity stayed fairly quiet on Wednesday as the U.S. markets wound down in pre-holiday trading, though deal action is likely before the week is out, bond sources said.

"There's been nothing today," one syndicate source said. "Hearing talk there might be something here tomorrow."

Bond sources expect a couple of deals in the Canadian markets before the week is finished, though new issue activity and secondary trading likely will be quieter with the U.S. markets closed on Thursday and closed early on Friday for the Thanksgiving holiday.

"We'll trade here tomorrow, but it'll be domestic bank bonds, domestic utilities; but even then there won't be that much with Treasuries being down," a bond source said. "Canada will trade, but it will be in a little bit of a void. We'll see what's going on in Europe."

Reliance LP continued with meetings on Wednesday for an offering of senior secured notes (/BBB/DBRS: BBB) in Canada with pricing possible later in the week, according to sources.

"Nothing from it yet," one source said.

Innergex Renewable Energy Inc. was in the market with an offering of cumulative redeemable fixed-rate preferred shares.

In the secondary market, Athabasca Oil Corp.'s 7½% senior secured second lien notes due 2017 traded flat along with other Canadian high-yield bonds, a source said.

"Not much trading," the source said.

The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 101 bps.

The Markit CDX Series 18 North American high-yield index rose to 99.23 from 98.94.

Canadian government bonds closed mostly flat. The 10-year note yield rose 1 bp to 1.77%. The 30-year bond yield ended unchanged at 2.35%.

Home prices in Canada fell 0.2% in October from the previous month, according to the Teranet-National Bank Composite House Price index on Wednesday.

Innergex sells preferreds

Innergex Renewable Energy said on Wednesday that it sold C$50 million of cumulative redeemable fixed-rate preferred shares that yield 5.75% for the fixed-rate period.

The company sold 2 million shares of the series C preferred stock (DBRS: Pfd-3) at C$25.00 per share.

The offering includes an over-allotment option of an additional C$7.5 million, or 300,000 shares.

TD Securities Inc., National Bank Financial Inc. and BMO Capital Markets Corp. were the lead managers.

The shares will not be redeemable prior to Jan. 15, 2018. On and after Jan. 15, 2018 on not more than 60 nor less than 30 days' notice, Innergex may redeem all or from time to time any of the then outstanding shares for $26.00 per share if redeemed on or prior to Jan. 15, 2019; $25.75 if redeemed thereafter and on or prior to Jan. 15, 2020; $25.50 if redeemed thereafter and on or prior to Jan. 15, 2021; $25.25 if redeemed thereafter and on or prior to Jan. 15, 2022; and $25.00 per share if redeemed thereafter.

The Longueuil, Quebec-based renewable power company plans to use the proceeds to repay a portion of the corporation's revolving term credit facility and for general corporate purposes.

Athabasca flat

Athabasca Oil's 7½% senior secured second-lien notes due 2017 (/B/DBRS: B) traded mostly unchanged on Wednesday at 99 bid, par offered, a source said.

The company sold C$550 million of the five-year notes on Nov. 9 at par.

Athabasca Oil is a Calgary, Alta.-based based oil sands developer.

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