Livingston, Southern Pacific Resources eye deals; new bank paper likely on fiscal year-end

By Cristal Cody

Prospect News, Oct. 29 - Several Canadian deals are in the high-yield pipeline, including C$135 million in debt from Livingston International Inc.

The roadshow finished on Thursday and pricing is expected on Monday or Tuesday, according to a source.

"Hearing coupon feedback from the handful of clients that may play of 10.5%-10.75%," the source said.

The Toronto-based company is a leading North producer of customer brokerage and transportation logistics services. Livingston was taken private by a consortium that included CPP Investment Board and Sterling Partners on Jan. 20, 2010.

Also coming up in November, Southern Pacific Resources Corp. is expected to price C$225 million in 9% to 10% debt.

The Calgary, Alta.-based company is a junior oil sands exploration company focused on the Athatbasca oil sands region of Alberta.

New high-grade financial paper is expected to price in November, according to sources.

Friday marked the fiscal year-end for Canadian banks.

"We see a flurry of flows that relate to squaring of positions at the fiscal year," said Eric Lascelles, chief Canada macro strategist at TD Securities Inc. in Toronto. "One of the themes of the last few months is the corporate interest as corporations jump all over the low cost of borrowing, so the next two months will be busy from a corporate perspective and some bank paper."

Elsewhere in Canada, government bonds climbed, which sent yields down.

"The bond market has rallied fairly handily today," Lascelles said. "The bond markets around the world have been strong today. Ten-year yields are down 5 to 7 basis points across the board in Germany, the U.K., Canada and the United States."

Investors felt better putting their assets in safer debt on softer economic figures released Friday, he said.

Canada's 10-year note yield fell to 2.81% from opening the day at 2.87%. The two-year Canadian note yield dropped to 1.414% from 1.43%.

U.S. Treasuries were higher on the day, with yields down on softer economic data and as traders square up before the midterm elections on Tuesday and the Federal Reserve's decision on the quantitative easing program expected Wednesday.

The yield on the 10-year note fell 6 bps to 2.6%. The two-year note yield also finished lower, down 3 bps at 0.34%.

The Commerce Department said that the gross domestic product rose a sluggish 2% in the third quarter, as expected, but up from 1.7% in the previous three-month period. The University of Michigan consumer credit confidence fell to 67.7 in October from 67.9 in September.

"The GDP data that came out was a little bit weaker than expected," said William O'Donnell, Treasury strategist at RBS Securities Inc.

Trading volume was moderate ahead of the weekend.

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