Arrow Lakes, Millar Western, Canadian Satellite wrap deals; Ontario sells C$750 million

By Cristal Cody

Prospect News, March 31 - Canada's bond market squeezed in three deals from Arrow Lakes Power Corp., Canadian Satellite Radio Holdings Inc. and the Province of Ontario, while Millar Western Forest Products Ltd. priced bonds in the United States as the month came to a close.

Canadian Satellite Radio, parent of XM Canada, said late Thursday that it sold its deal that had been in the works for months.

Trading was slower on Thursday on the quarter end, but corporate bonds were flat to slightly stronger, a source said.

Provincial bond "spreads have been narrowing," another source said.

Canadian government bonds were lower on the strong gross domestic product data released at the month's end. Canada Statistics said the GDP rose 0.5% in January, the same pace as in December.

"It's forced the view the first quarter is going to see strong growth and the Bank of Canada might need to revise up its growth forecast," one source said.

The Bank of Canada next meets on April 12.

Canada's 10-year bond yield rose to 3.35% from 3.29%. The 30-year bond yield rose 3 basis points to 3.75%.

U.S. Treasuries dipped, sending yields up more than 5 bps on shorter-dated bonds. The two-year note yield rose 7 bps to 0.82%, and the five-year note yield rose 9 bps to 2.26%. The benchmark 10-year note yield rose 2 bps to 3.46%.

"It's the last day of the quarter," a source said. "It's been relatively quiet out there as a result of the quarter-end malaise."

Trading mainly was focused on window dressing on Thursday, a source said.

Arrow Lakes sells 30-years

In Canada, Arrow Lakes Power sold C$350 million of 5.516% series B senior amortizing bonds (A2/DBRS: A) due April 5, 2041 at par on Thursday, an informed source said.

The bonds priced at a spread of 177 bps versus the Canadian bond curve, compared to talk of 180 bps over the curve.

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

The bonds have a Canada call at 44 bps over the government benchmark.

Proceeds will be used to repay existing debt, to fund reserves and to pay a special dividend to the company's owners. The dividend will be used to fund a new hydroelectric generation project.

The company operates a hydroelectric generation station near Castlegar, B.C., and is co-owned by Columbia Power Corp. and CBT Arrow Lakes Power Development Corp., a subsidiary of Columbia Basin Trust.

Canadian Satellite prices

In a long-anticipated deal, Canadian Satellite Radio Holdings said Thursday it sold C$62 million of 9.75% senior notes due 2018 at par on Thursday.

The sale was downsized from a previous estimate of C$70 million.

The deal was offered in Canada and the United States.

National Bank Financial Inc. was the bookrunner, and Canaccord Genuity Corp. was the co-lead manager.

The proceeds will be used to help complete the all-stock merger with Sirius Canada Inc. and fund the cash payments under the exchange offer of $69.8 million outstanding in 12.75% senior notes due 2014, to repay outstanding debt and for general corporate purposes.

The bond offering is expected to close in May or June, on the same date as the closing of the merger.

The satellite radio and communications company is based in Toronto.

Millar Western upsizes

Across the border, Millar Western Forest Products priced an upsized $210 million issue of 10-year senior notes (B3/B-) at par to yield 8.5% on Thursday, according to market sources.

The yield printed at the wide end of the 8.25% to 8.5% price talk.

Goldman Sachs & Co. ran the books for the deal, which was upsized from $200 million.

The company plans to use the proceeds and about C$4 million of cash on hand to purchase or redeem all of its outstanding US$190 million of 7.75% senior notes due 2013.

In secondary trading, one trader saw the notes at 100.625 bid, 101.125 offered. A second had them at 100.25 bid, 100.75 offered, while a third pegged them at 100.5 bid, 100.75 offered.

Privately held Edmonton, Alta.-based Millar Western produces and markets hardwood and softwood bleached pulp and softwood lumber.

Ontario reopens bonds

In the provincial bond market, Ontario (Aa1/AA-/DBRS: AA) sold C$750 million in a reopening of its 4% benchmark notes due June 2, 2021 at 99.057 to yield 4.114%, an informed source said.

The notes priced at a spread of 71.5 bps over the Government of Canada benchmark.

CIBC World Markets was the lead manager.

The province previously reopened the issue on Feb. 23 to sell C$750 million of the notes at 69 bps over the government benchmark. The total outstanding now is C$2.25 billion.

Paul A. Harris and Paul Deckelman 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.