Inter Pipeline notes snapped up; Hyundai Capital on roadshow; Canadian Pacific Rail flat

By Cristal Cody

Prospect News, May 23 - Canadian pricing action picked up on Wednesday with provincial and corporate offerings, sources said.

Inter Pipeline Fund sold an upsized C$400 million of 10-year senior medium-term notes.

Caterpillar Financial Services Ltd., the Canadian subsidiary of Caterpillar Inc., also was expected to bring C$550 million of three-year and five-year notes, a bond source said.

"The last I heard it was upsized to C$750 million," the source said.

Caterpillar's U.S. subsidiary, Caterpillar Financial Services Corp., tapped the U.S. market on Tuesday in a $1.5 billion three-tranche offering.

Additional pricing details were not available by press time.

"Other than the new issues, it's quiet," a syndicate source said. "These issuers, we haven't seen a lot of product come out. The Inter Pipeline deal, people just took that and bought it and said 'thanks very much.'"

A few more offerings are likely for the remainder of the week, sources said.

South Korea's Hyundai Capital Services Inc. (Baa2/BBB+/BBB) is underway in a "mini" roadshow in Canada this week, a syndicate source said.

The financing company is based in Seoul.

"Whether or not something develops out of them, we have to wait and see," the source said. "There's potentially a number of roadshows that have been coming through, sometimes they come to fruition and sometimes they don't."

In the U.S. market on Wednesday, the Province of Manitoba sold $600 million of seven-year global debentures.

Canadian Pacific Railway Ltd.'s bonds traded unchanged on the day but are tighter from trading last week following news of the Teamsters strike disrupting shipments, a source said.

The Markit CDX Series 18 North American investment-grade index was flat for a second day at a spread of 118 bps.

Canada's 30-year bond yield touched a record low on Wednesday of 2.393%. The 30-year bond yield ended the day 5 bps lower at 2.4%. Canada's 10-year note yield fell to 1.88% from 1.915.

Bonds were helped by Canada's C$1.4 billion auction of 3.5% bonds due 2045 and C$400 million bond buyback as well as concerns over Greece's potential departure from the euro zone.

"Canada won't see another long bond auction until at least October - we skip a quarter in our issuance - so it will be awhile before we get new supply; so that was supportive. But it was the overall broader global risk aversion that helped things earlier today," a government bond source said.

Inter Pipeline Fund prices

Inter Pipeline Fund sold an upsized C$400 million of 3.776% 10-year senior medium-term notes at par on Wednesday, an informed bond source said.

The notes due May 30, 2022 (/BBB+/DBRS: BBB) priced at a spread of 190 bps over the Government of Canada benchmark.

The deal was upsized from C$300 million.

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

The notes are redeemable at the Canada Bond Yield plus 47.5 bps.

Proceeds will be used to repay a portion of Inter Pipeline's existing bank debt, the company said in a statement.

Calgary, Alta.-based Inter Pipeline Fund owns and operates energy infrastructure assets that include petroleum transportation and storage.

Manitoba sells $600 million

In the U.S. investment-grade market on Wednesday, the Province of Manitoba (Aa1/AA/DBRS: A) brought an offering of $600 million of 1.75% seven-year global debentures, priced at a spread of mid-swaps plus 31 bps, or Treasuries plus 62.95 bps, according to an FWP filing with the Securities and Exchange Commission.

The debentures due May 30, 2019 (Aa1/AA) priced at 99.889 to yield 1.767%.

The offering was upsized from $500 million, a source said.

CIBC World Markets Inc., HSBC Securities (USA) Inc., National Bank Financial Inc. and RBC Capital Markets Corp. were the lead managers. Co-managers were BMO Capital Markets Corp., Casgrain & Co. Ltd., Scotia Capital (USA) Inc. and TD Securities (USA) LLC.

Proceeds will be used for general government purposes, according to a preliminary prospectus supplement filed with the Securities and Exchange Commission on Wednesday.

Canadian Pacific Railway flat

Canadian Pacific Railway's 4.5% notes due 2022 were flat at 183 bps on Wednesday, a source said.

The notes are about 4 bps better from Friday.

Talks between the railroad operator and the union continued on Wednesday.

Canadian Pacific Railway sold $250 million of the 10-year notes (Baa3/BBB-/) on Nov. 28, 2011 at a spread of Treasuries plus 275 bps.

The railroad operator is based in Calgary, Alta.

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