National Bank of Canada sells C$1 billion; New Gold prices $300 million; maple deals eyed

By Cristal Cody

Prospect News, April 2 - National Bank of Canada opened the week with a domestic offering of C$1 billion of 10-year subordinated notes, while New Gold Inc. sold a U.S. dollar-denominated $300 million issue of eight-year senior notes on Monday, informed bond sources said.

The National Bank of Canada deal proved "very popular" with more than 80 buyers, a source said.

"Certainly, people had their buying hats on. Now we just need to see if we can find some more issuers," the source said.

Deal activity in Canada is expected to stay light over the short holiday week. The Canadian bond markets close early on Thursday and will be closed on Friday for the Good Friday holiday. Bond markets in the United States also will close early on Friday.

"It's a short week. We don't think there's a very robust pipeline," a syndicate source said.

Another bank deal could be ahead before the week is out, but not all the Canadian banks plan a deal, a source said.

"There's a huge demand for bank paper right now," the bond source said. "If all the banks really wanted to issue, March had a lot of opportunities. That kind of leads you to believe they don't have a lot to do in Canada."

Financial maple bond deals may be the highlight in April as issuance is expected to remain light, according to a source.

"There's not a lot of maturities due. It might be the month for maple issuers," the source said. "We haven't had a financial maple since spring 2011."

U.K.-based Lloyd's TSB Bank plc held a non-deal roadshow in Canada the previous week.

"But from what I understand, they are not in a hurry to issue," the source said.

Bonds were mostly unchanged in trading, a source said.

The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 90 bps on Monday.

Canadian government bonds traded lower on a stronger outlook from the Bank of Canada on Monday. Canada's 10-year note yield rose 1 bp to 2.11%. The 30-year bond yield closed up 1 bp to 2.66%.

National Bank of Canada prices

National Bank of Canada priced C$1 billion of 3.261% fixed-to-floating-rate notes due April 11, 2022 at par on Monday, a bond source said.

The subordinated notes (Aa3/A-/DBRS: A) priced at a spread of 167 bps over the Canadian bond curve.

The deal had more than 80 buyers.

The bonds will be converted to a floating-rate issue after April 11, 2017.

National Bank Financial Inc. was the manager.

National Bank of Canada last brought a deal in the domestic market on Jan. 25 with the sale of C$1 billion of 2% three-year deposit notes at a spread of 108 bps over the Canadian government benchmark.

The financial services company is based in Montreal.

New Gold sells notes

New Gold tapped the U.S. high-yield market to sell $300 million of eight-year senior notes (B2/BB-) at par to yield 7% on Monday, according to a syndicate source.

The yield printed at the tight end of the 7% to 7¼% yield talk.

J.P. Morgan Securities LLC and Scotia Capital were the joint bookrunners. RBC Capital Markets and UniCredit Bank were the co-managers.

The Vancouver, B.C.-based copper and gold mining company plans to use the proceeds to fund the redemption of its Canadian dollar-denominated 10% senior secured notes due 2017 and for general corporate purposes.

Paul A. Harris contributed to this review

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