Master Credit Card Trust upsizes; Ontario, Manitoba sell bonds; First Capital Realty flat

By Cristal Cody

Prospect News, April 19 - The Canadian bond markets saw some action on Tuesday with an asset-backed offering of C$800 million in credit card receivables notes from Master Credit Card Trust and a C$600 million add-on from the Province of Ontario.

In a dollar-denominated deal, the Province of Manitoba sold $750 million of 1.375% three-year global bonds on Tuesday, an informed source said.

While one or two more deals may price on Wednesday, the remainder of the week is likely to be quiet, one informed source said. The Canadian and U.S. markets will be closed on Friday.

"There's not a lot of supply this week," the source said. "There's a big holiday schedule coming up in Canada and globally as well, including Britain. That's going to limit the global activity we see over the next couple of weeks."

Secondary volume was lower on the day, but the notes from Master Credit Card Trust tightened about 1 basis point, a source said.

Some of the lower volume may have been attributed to First Capital Realty Inc., which presented an investor luncheon to the Canadian market on Tuesday and "had very good attendance," one source said. No upcoming deals are expected from the company, the source said.

First Capital Realty, a Toronto-based owner and operator of market-anchored shopping centers in metropolitan areas in Canada, on March 22 sold C$110 million in debentures.

"First Capital bonds are trading roughly unchanged to marginally better," a trader said. "They're holding in there, 235 to 240 area to the curve."

The 5.6% debentures due 2020 (Baa3//DBRS: BBB) priced at a spread of 237.8 basis points over the Government of Canada benchmark.

In government bonds, Canada's bonds fell and pushed yields back up on Tuesday. The 10-year bond yield rose 3 bps to 3.27%. The 30-year bond yield rose to 3.71% from 3.68%.

"It's been about the CPI data and the underlying yield curve," a source said.

Statistics Canada said the consumer price index rose 3.3% in the 12 months to March, the largest year-over-year increase since September 2008. The rise follows a 2.2% increase in February.

U.S. Treasuries rose on Tuesday as investors shrugged off Standard & Poor's negative outlook the previous day on the country's credit. The climb sent yields down 1 basis point to 3 bps, wider on the longer end of the curve.

MasterCard sells C$800 million

In the lone corporate deal of the day, Master Credit Card Trust priced C$800 million in an upsized offering of 3.502% class A series 2011-1 credit card receivables notes due May 21, 2016 at par, an informed source said.

The notes (Aaa/DBRS: AAA) priced at a spread of 83 basis points over the Canadian bond curve, compared to initial guidance of 85 bps over the curve.

The deal was upsized from C$500 million.

BMO Capital Markets Corp. was the lead manager.

"Haven't seen too much action," one source said. "Seems like the deal was oversubscribed but was better bid. It's a basis point better."

Master Credit Card Trust is a securitization vehicle for BMO MasterCard credit card receivables, the largest MasterCard portfolio in Canada.

Ontario reopens bonds

In the provincial bond market, Ontario (Aa1/AA-/DBRS: AA) sold C$600 million in a reopening of its 4.65% bonds due June 2, 2041 at 102.223 to yield 4.514% on Tuesday, an informed source said.

The bonds priced at a spread of 80.5 basis points over the Government of Canada benchmark.

TD Securities Inc. was the lead manager.

The province previously reopened the issue in an add-on of C$600 million sold on March 4 at a spread of 79 bps over. The total outstanding now is C$6.75 billion.

Manitoba sells $750 million

In the dollar-denominated deal, the Province of Manitoba sold $750 million of 1.375% three-year global bonds on Tuesday at a spread of mid-swaps plus 5 basis points, or Treasuries plus 28.25 bps, an informed source said.

This was in line with talk in the mid-swaps plus 5 bps area.

The bonds (Aa1/AA) were priced at 99.921 to yield 1.402%.

They are non-callable.

CIBC World Markets Corp., HSBC Securities (USA) Inc., the National Bank Financial Inc. and RBC Capital Markets Corp. were bookrunners.

Proceeds will be used to fund advances to Manitoba Hydro-Electric board and for general corporate purposes.

The issuer is based in Winnipeg.

Andrea Heisinger contributed to this review.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.