HSBC Bank Canada sells C$1 billion seven-year notes; Lloyds Bank prices C$350 million

By Cristal Cody

Prospect News, Sept. 29 - Corporate issuers brought three deals in the U.S. and Canadian bond markets on Wednesday, while another company plans an upcoming sale, sources said.

HSBC Bank Canada priced C$1 billion seven-year deposit notes on Wednesday.

The 3.558% notes priced at a spread of 126 basis points over Canada's benchmark bond due 2017.

"It's probably 6 to 7 basis points tighter than where it came," said Mark Wisniewski, a portfolio manager with Gluskin Sheff + Associates Inc.

Also in the market on Wednesday, United Kingdom-based Lloyds TSB Bank plc priced C$350 million five-year notes.

The 4.57% notes priced at par to yield 260 basis points over the Government of Canada curve.

The offering is Lloyds' first issue of Maple bonds, which are a Canadian dollar-denominated bond issued by a foreign company.

Royal Bank of Canada was the lead manager of the sale.

"It's doing relatively well," said Wisniewski, whose Toronto-based firm manages about C$5.5 billion in assets, including Maple bonds.

Demand is expected to stay strong for new deals.

"We've got a fairly good bid in the general marketplace in Canada right now," Wisniewski said. "The tightening in spreads is partially due to the fact that the market has a fairly voracious appetite for credit still."

Royal Bank of Canada sells $1 billion

Also on Wednesday, Royal Bank of Canada priced $1 billion 1.25% senior unsecured notes due 2014 (Aaa/AA-) at a spread of 53 bps over U.S. Treasuries.

The notes mature in January 2014.

The notes were sold in the United States, and the deal was managed by RBC Capital Markets Corp. and Barclays Capital Inc.

Proceeds will be used for general corporate purposes.

The financial services company is based in Toronto.

Molson Coors Brewing on tap

Looking ahead to new deals, the Molson Coors Brewing Co. intends to offer C$500 million in seven-year senior notes, according to an 8-K filing on Wednesday with the U.S. Securities and Exchange Commission.

The notes due 2017 will price through a subsidiary of the company.

The notes will not be offered for sale in the United States absent a registration or exemption.

The proceeds will be used to refinance a portion of current debt and for general corporate purposes.

Canadian bond yields drop

Canadian government bond yields declined on Wednesday. The 10-year bond yield declined to 2.738% from 2.75%. The Canadian two-year bond yield fell to 1.392% from 1.4%.

U.S. Treasuries fell on Wednesday after comments from Federal Reserve policy makers stemmed expectations of another round of bond purchases to stimulate the economy.

In speeches, Philadelphia Federal Reserve president Charles Plosser opposed a second round of bond buys, while Boston Federal Reserve president Eric Rosengren supported another round of government bond purchases.

"That's not anything new, but it wasn't affirming for another round of QE2," said Mary Ann Hurley, a fixed income trader for D.A. Davidson & Co.

The 10-year note yield rose 3 bps to 2.5%. The two-year note was up 1 bp at 0.42%.

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