John Deere, Lloyds TSB Bank bring deals; Taseko to sell $200 million; John Deere firms

By Cristal Cody

Prospect News, April 5 - Two issuers tapped the Canadian bond markets on Tuesday, with both deals well-received, informed sources said.

Lloyds TSB Bank plc came back to the market for the first time this year with an upsized C$500 million of 5.28% senior Maple bonds due April 19, 2016.

John Deere Credit Inc.'s deal also was saw good demand and firmed in the secondary market, sources said.

The primary market appears to be picking up, with at least one new deal on the calendar from Taseko Mines Ltd., which starts a roadshow on Wednesday for a $200 million offering of eight-year senior notes, according to informed sources.

In trading overall, the Canadian corporate bond markets were mostly flat, several sources said.

"If anything the market is for the most part fairly unchanged," said a bond source who follows the high-grade and high-yield markets. "You could argue in some small way that a couple things are better bid but across the board things or more or less unchanged."

Another corporate bond source agreed.

"It was a pretty quiet day. Financials seems pretty unchanged," the source said. "Spreads are pretty much unchanged to a little tighter."

In the secondary market, Paramount Resources Ltd.'s 8.25% notes due Dec. 13, 2017 traded higher, according to an informed source.

In other trading, just one day after learning that Google Inc. had made a $900 million play for Nortel Networks Ltd.'s patent portfolio, Nortel notes closed the day mixed, a trader said. The bonds had traded up on Monday on the news in active dealings.

Canada's government bonds fell on the short end of the curve, sending yields up. The two-year bond yield rose 6 basis points to 1.87%, and the 10-year bond yield rose 3 bps to 3.38%. The 30-year bond yield was flat at 3.77%.

Treasuries sold off on Tuesday with bonds also pressured on the short end of the curve. The 10-year note yield climbed 6 bps to 3.48%. The 30-year bond yield rose 2 bps to 4.5%.

Tuesday's release of the minutes of the Federal Reserve's most recent policy meeting on March 15 held no surprises, analysts said.

"What has got us down is this idea inflation is picking up," said Nick Kalivas, a market strategist at MF Global. "The market seems a bit worried the Fed may be too relaxed about it; that's why we're seeing a little bit lower prices today."

Lloyds sells C$500 million

Lloyds TSB Bank (Aa3/A+//DBRS: AA) priced an upsized C$500 million of 5.28% senior Maple bonds due April 19, 2016 at 99.987 to yield 5.283% on Tuesday, an informed source said.

The notes, which were increased from C$250 million, priced in like with guidance at a spread of 250 bps over the Canadian bond curve.

The bonds were sold under the issuer's Canadian private placement wrap under the €50 billion euro medium-term note program.

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

Lloyds, a unit of United Kingdom-based Lloyds Banking Group plc, last was in the Canadian bond market on Sept. 29, 2010 with a sale of C$350 million 4.57% Maple bonds due Oct. 13, 2015, which priced at 160 bps over the curve.

John Deere Credit prices

John Deere Credit (A2/A//DBRS: A) sold C$150 million 3.25% medium-term notes due April 8, 2015 at 99.695 to yield 3.332% on Tuesday, an informed source said.

The notes priced at a spread of 78 bps over the Canadian bond curve, compared to price talk of 80 bps over the curve.

RBC Capital Markets Corp. and TD Securities Inc. were the lead managers.

The market saw "very good demand for that name," a trader said of John Deere's deal.

In the secondary market, the deal was quoted at 70 bps bid.

The Burlington, Ont.-based equipment financing and leasing company is a unit of Deere & Co.

Taseko Mines sets roadshow

Taseko Mines will begin a roadshow on Wednesday for a $200 million offering of eight-year senior notes, according to an informed source.

The roadshow, which is tentatively scheduled to include stops in the Mid-Atlantic states, New York City, Boston, Toronto, Minneapolis, Los Angeles and San Francisco, is scheduled to wrap up on April 13.

Barclays Capital is the bookrunner for the public notes offering. BMO Nesbitt Burns and TD Securities are the co-managers.

The notes come with four years of call protection and feature standard high-yield covenants.

The Vancouver, B.C., mineral and metals exploration and production company plans to use the proceeds to fund the expansion of Gibraltar Mine and for general corporate purposes.

Paramount higher

In trading, Paramount Resources' 8.25% notes due Dec. 13, 2017 (Caa2/B+) traded at 104 bid, 105 offered on Tuesday from 103.75 bid, 104.75 offered the previous day, a source said.

The company reopened the issue on Jan. 28 to sell C$70 million at 103.00 and originally priced the issue on Nov. 30 when it sold C$300 million at par.

Calgary, Alta.-based Paramount Resources is an oil and natural gas exploration, development and production company.

Nortel ends mixed

Nortel Networks remained a topical credit, as the market digested news that Google Inc. had made a $900 million bid for the company's patent portfolio.

A trader said the 10.75% notes due 2016 and the 0% notes due 2011 were "very active" at 92.5 and 88.75, respectively.

He called the former down a quarter-point and the latter up half a point.

Another trader said the bonds were trading in the "same sort of Zip code," seeing the 10.75% notes at 92.5 bid, 93 offered.

Google's bid will be the stalking horse bid in an auction to sell off one of the Toronto-based telecommunications company's last remaining assets. It is expected that the price could climb much higher as bidders vie for the portfolio of about 6,000 patents and patent applications.

Nortel filed for bankruptcy protection in January 2009 and has been selling assets ever since.

Proceeds from the sale of the patent portfolio will be used to pay off creditors. Equity holders will receive nothing from a potential sale.

Paul A. Harris and Stephanie N. Rotondo contributed to this review

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