AltaGas sells C$200 million five-year notes, debt firms 5 bps; Anergy Capital bonds better

By Cristal Cody

Prospect News, March 21 - Canadian market activity remained fairly light on Monday with one new deal thrown in the ring from AltaGas Ltd.

"Quiet Monday," one source said. "Spreads are definitely tighter today, but there's not a lot of trading. It's still March break for some people."

In the secondary market, AltaGas' bonds firmed 5 basis points, a source said.

Trading activity is expected to pick up as some market participants return from vacations taken the previous week, sources said.

In the high-yield market, Anergy Capital Inc.'s bonds were stronger, one source said.

The Vancouver, B.C.-based capital pool company's 10.125% notes due 2015 (B2/B+) traded Monday at 106.125 bid, 107.125 offered from 104.75 bid, 106.25 offered on Friday.

Canadian government bonds fell sending yields up sharply on the short to mid range of the curve as stocks improved.

The two-year note yield climbed 7 bps to 1.68% and the five-year note yield jumped 16 bps to 2.58%.

The 10-year bond yield rose 4 bps to 3.21%, while the 30-year bond yield

U.S. Treasuries also fell. The 10-year Treasury note yield rose 5 bps to 3.32% and the 30-year bond yield rose 4 bps to 4.45%.

Trading volume was average to below average on the day, sources said. The Japanese markets were closed for a holiday.

"The market's basically had a soft tone and the recovery in the equity market was one negative," said Nick Kalivas, a market strategist at MF Global Holdings.

Bonds also were pressured by the U.S. Treasury Department's announcement that it will begin to sell its $142 billion portfolio of mortgage-backed securities. The Treasury plans to sell $10 billion a month beginning this month.

AltaGas sells C$200 million

AltaGas priced an upsized C$200 million in 4.1% senior medium-term notes due March 24, 2016 at 99.964 to yield 4.108% on Monday, an informed source said.

The notes (/BBB/DBRS: BBB) priced at a spread of 156 basis points over the Canadian bond curve, compared to initial guidance in the area of 158 bps over the curve.

"They had a range of 158 plus, they did use the 2 basis points and tightened in to 156," a source said. "The deal went very well."

The deal was upsized from C$150 million.

The bonds have a Canada call at 38 bps over the Government of Canada benchmark.

CIBC World Markets Inc. and RBC Capital Markets Corp. were lead managers. Co-managers were BMO Capital Markets Corp., National Bank Financial, Scotia Capital Inc., TD Securities Inc. and HSBC Securities (Canada) Inc.

The proceeds will be used to reduce outstanding bank debt and for general corporate purposes.

In secondary trading, the bonds traded 5 bps tighter, a source said.

AltaGas is an energy company based in Calgary, Alta.

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