CIBC, Laurentian Bank price; British Columbia to tap U.S. market; deals push bonds wider

By Cristal Cody

Prospect News, Oct. 15 - Canadian deal activity centered on financial offerings from Canadian Imperial Bank of Commerce and Laurentian Bank of Canada on Monday, while other Canadian issuers plan U.S. dollar-denominated offerings over the week, syndicate sources said.

CIBC sold C$1.25 billion of 2.35% five-year deposit notes late afternoon following a C$200 million offering of 3.132% 10-year notes from Laurentian Bank of Canada.

CIBC's deal, which comes on the heels of Friday's C$1.75 billion 12-year subordinated debt offering from the Bank of Nova Scotia, "pushed the market out another basis point," a Canadian debt capital market source said.

"On Friday, because of that Scotiabank subdebt deal, things were wider by 2 to 3 basis points and then with this additional deposit note today, it pushed it out another 1 bp," the source said.

Caisse Centrale Desjardins' C$800 million offering of four-year deposit notes due 2016 priced on Thursday and Fairfax Financial Holdings Ltd.'s C$200 million sale of 5.84% senior notes due 2022 sold on Wednesday had traded stronger in the secondary market but widened slightly under the weight of the new deals.

"Everything was in until that Scotia deal on Friday and then that weighed on the market and took the new issues back to around new issue spread with everything wider by about a basis point today," the debt capital markets source said.

The deal pipeline is expected to continue over the week in the corporate and provincial markets in the Canadian and U.S. markets, sources said.

On Tuesday, Tervita Corp. plans to start a roadshow for a U.S. dollar-denominated offering of $290 million of seven-year senior notes.

The Province of British Columbia is expected to tap the U.S. dollar market with a minimum offering of $500 million of 10-year notes on Tuesday.

"By all indications, it should go quite well," a source said.

Domestic primary activity has been mostly quiet with some deal action seen the previous week from the provinces of Quebec and Nova Scotia, as well as the Regional Municipality of York.

"We think activity will pick up toward the back half of this week but for the most part it should be fairly quiet," a provincial syndicate source said.

New issuance is expected from the Province of Ontario, which released its fall economic budget statement on Monday, the source said.

In Canada, provincial bond spreads tightened about 1 bp across the curve with activity mostly quiet.

"We've seen some pressure in provincials for the last couple of weeks," the provincial source said. "They're taking their cue today from what the stock market's doing. We also saw international buying of long-dated provincial paper, so that's also helping."

Canadian government bonds were mixed on stronger economic data.

The 10-year note yield ended flat at 1.80%. The 30-year bond yield rose 2 bps to 2.41%.

The Canadian Real Estate Association said in a report that existing home sales rose 2.5% in September, the first monthly gain since March.

Upcoming economic reports for the week include Canada's August foreign securities transactions, August wholesale trade data and September consumer prices.

CIBC sells C$1.25 billion

Canadian Imperial Bank of Commerce (Aa2/A+/DBRS: AA) priced C$1.25 billion in the offering of 2.35% five-year deposit notes at 99.873 to yield 2.377%, according to an informed bond source.

The notes due Oct. 18, 2017 came at a spread of 99 bps over the Government of Canada benchmark.

The issue is non-callable.

CIBC World Markets Inc. was the bookrunner.

The financial institution is based in Toronto.

Laurentian Bank taps market

In the day's other new deal, Laurentian Bank of Canada (/BBB+/DBRS: BBB) sold C$200 million of 3.132% 10-year notes at par to yield a spread of 177 bps over the Canadian bond curve, an informed bond source said.

Laurentian Bank Securities, Inc. and BMO Capital Markets Corp. were the lead managers.

The banking institution is based in Montreal.

British Columbia on tap

Coming up on Tuesday, the Province of British Columbia (AAA/AAA/DBRS: AA) is expected to price a minimum of $500 million in a new U.S. dollar-denominated offering of 10-year notes. Guidance is in the mid-swaps plus low 30 bps area, a bond source said on Monday.

HSBC Capital (Canada) Inc., Scotia Capital Inc., CIBC World Markets and National Bank Financial Inc. are the lead managers.

Tervita roadshow eyed

Tervita plans to start a brief roadshow on Tuesday for its U.S. dollar $290 million offering of seven-year senior notes (expected ratings Caa2/CCC+), according to an informed source.

The roadshow wraps up on Thursday.

Deutsche Bank Securities Inc. is the left bookrunner. Goldman Sachs & Co., RBC Capital Markets and TD Securities are the joint bookrunners.

The Rule 144A and Regulation S notes become callable after three years at par plus 75% of the coupon. The notes feature a 101% poison put.

The Calgary, Alta.-based environmental and energy services company plans to use the proceeds to repay debt under its U.S. dollar- and Canadian dollar-denominated revolvers, as well as to pay fees and expenses related to an amendment to its senior secured credit facilities, and for general corporate purposes.

Petaquilla sets talk

Also in the high-yield bond market, Petaquilla Minerals Ltd. talked its $210 million of offering of five-year senior secured notes (Caa1) with a 12% yield, as well as attached warrants for shares of the company's common stock, an informed source said on Monday.

The deal, which was originally announced in mid-summer, is set to price during the middle part of the week ahead.

Global Hunter Securities is the bookrunner.

The notes come with two years of call protection.

Proceeds will be used to refinance debt and to finance capital expenditures related to the Lomero-Poyatos mine in Spain.

In late summer the deal was sidelined by a hostile takeover bid from Inmet Mining Corp., which announced on Sept. 5 that it was attempting to acquire Petaquilla for C$112 million, in a cash and stock bid.

In the press release announcing the bid, Inmet specified that in addition to customary closing conditions its bid was subject to Petaquilla withdrawing the notes offering.

Petaquilla is a Vancouver, B.C.-based copper exploration and production company.

Paul A. Harris contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.