CIBC prices C$750 million; Brookfield, Merrill Lynch Canada sell mortgage bonds; Nexen up

By Cristal Cody

Prospect News, Dec. 10 - December primary activity continued to pick up with three bond deals priced in the Canadian markets on Monday from Canadian Imperial Bank of Commerce, Brookfield Canada Office Properties and Merrill Lynch Canada Inc.

In the U.S. high-yield market, Eldorado Gold Corp. sold an upsized $600 million issue of eight-year senior notes.

CIBC raised C$750 million in a reopening of its 2.35% five-year deposit notes.

In the offering from Brookfield Canada, unit BP LP sold C$525 million of 3.244% seven-year Bay Wellington Tower Phase II senior secured mortgage bonds.

Merrill Lynch Canada came with a C$235 million offering of 1.85% five-year mortgage-backed securities on Monday.

"These deals came by surprise," one source said of Monday's session.

In other market activity on Monday, Brookfield Residential Properties Inc. upsized its U.S. dollar offering of eight-year senior notes (B2/BB-) to $500 million, with the deal set to price on Tuesday.

Activity going forward for the remainder of the week is expected, with Canada Housing Trust set to launch a C$5 billion to C$5.5 billion add-on to its 1.7% five-year mortgage bonds later in the week.

In the secondary market, Nexen, Inc.'s outstanding 6.2% notes due 2019 and 6.2% notes due 2039 came in following news that Canadian authorities had approved the Calgary, Alta.-based oil and gas company's $15.1 billion takeover by China's Cnooc Ltd.

"This morning they were 20 [basis points] better," a bond source said.

The Markit CDX Series 18 North American high-yield index climbed to 100.81 from 100.57 on Friday.

The Markit CDX Series 18 North American investment-grade index firmed 1 bp to a spread of 96 bps.

Government bonds ended flat to slightly better on the day. The Canadian 10-year note yield fell 1 bp to 1.70%, while the 30-year bond yield closed unchanged at 2.31%.

CIBC sells C$750 million

CIBC (Aa2/A+/DBRS: AA) sold C$750 million in a reopening of its 2.35% five-year deposit notes on Monday at 100.368 to yield 2.269%, according to an informed bond source.

The notes due Oct. 18, 2017 priced at a spread of 98 bps over the Government of Canada benchmark.

The issue is non-callable.

CIBC World Markets Inc. was the bookrunner.

The Toronto-based financial institution originally priced the notes on Oct. 15 in a C$1.25 billion offering at 99.873 to yield 2.377%, or a spread of 99 bps over the Government of Canada benchmark. The total outstanding is C$2 billion.

Bay Wellington bonds price

BP, owned by Brookfield Canada Office Properties, sold C$525 million of 3.244% seven-year Bay Wellington Tower Phase II senior secured mortgage bonds on Monday at par, a bond source said.

The bonds due Jan. 9, 2020 (A2) priced at a spread of 178 bps over the interpolated Government of Canada bond curve.

The bonds have an average life of 6½ years.

RBC Capital Markets, CIBC World Markets and Scotia Capital Inc. were the lead managers.

The Bay Wellington Tower, owned by Brookfield, is a financial and legal office complex in Toronto's financial district.

Merrill Lynch Canada prices

Merrill Lynch Canada priced C$235 million in a pool of 1.85% five-year mortgage-backed securities on Monday to yield 1.959%, a bond source said.

The bonds due Dec. 1, 2017 priced at a spread of 70 bps over the interpolated Government of Canada bond curve.

Merrill Lynch Canada was the bookrunner.

The Bank of America Corp. unit last tapped the Canadian debt markets on Aug. 21 when it sold a C$352.37 million two-tranche offering of mortgage-backed securities.

Eldorado Gold taps market

Eldorado Gold priced an upsized $600 million issue of eight-year senior notes (Ba3/BB/) at par to yield 6 1/8% on Monday, according to a market source.

The yield printed at the tight end of yield talk set in the 6¼% area.

J.P. Morgan Securities LLC, Citigroup Global Markets, HSBC and Bank of America Merrill Lynch were the joint bookrunners for the quick-to-market deal, which was upsized from $500 million.

Proceeds will be used to fund mine development, to repay revolver debt and for general corporate purposes.

The Vancouver, B.C.-based gold producer pulled a similar deal on Nov. 16 due to market conditions.

Brookfield now $500 million

Brookfield Residential Properties upsized its offering of eight-year senior notes (B2/BB-) to $500 million from $400 million on Monday, according to a syndicate source.

The Calgary, Alta.-based land developer and homebuilder talked the notes to yield 6½% to 6¾%.

The books close at 11 a.m. ET on Tuesday, and the deal is set to price thereafter.

Credit Suisse Securities (USA) LLC, Citigroup Global Markets and JPMorgan are the joint bookrunners.

The Rule 144A for life notes will become callable in three years at par plus 75% of the coupon.

The notes feature a three-year 35% equity clawback and a 101% poison put.

Proceeds will be used to refinance debt.

Paul A. Harris 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.