BAA Funding taps U.S. market; Desjardins to sell capital shares; APT Pipelines eyes Canada

By Cristal Cody

Prospect News, June 18 - BAA Funding Ltd. tapped the U.S. high-grade bond market on Monday after the holding company for London-based airport operator BAA Airports held a cross-country roadshow the previous week in Canada and the United States.

BAA Funding sold $500 million of 2.5% three-year senior notes (/A-/A-) at Treasuries plus 215 basis points.

A source on Friday said a Canadian dollar-denominated seven-year note offering was possible and/or a U.S. dollar sale.

Another bond source on Monday said a Canadian dollar-denominated offering has not been ruled out following the U.S. dollar deal.

"There's really no whisper of any numbers in Canada," the bond source said. "Having said that on the back of the U.S. transaction, I wouldn't be surprised if they're looking closely at the Canadian markets."

In one offering in Canada on Monday, Desjardins Group said it launched C$1.2 billion of capital shares to caisse members.

Canadian primary activity for the week is difficult to speculate on with events overseas and the U.S. Federal Reserve's policy-setting meeting outcome expected on Wednesday, several sources said.

Also the previous week's busier schedule of new deals from issuers including Canadian Natural Resources Ltd., Bell Canada, Cominar Real Estate Investment Trust and Canada Housing Trust may keep this week quieter, a source said.

One maple bond offering may be in the week's pipeline from Australian energy infrastructure company APA Group, according to informed sources.

The company's borrowing entity, APT Pipelines Ltd., (Baa2/BBB/) was "touring across Canada last week," one bond source said. "Now we're just waiting to see if there's going to be something."

Scotia Capital Inc. hosted the roadshow for Sydney, Australia-based APA Group, which is made up of the Australian Pipeline Trust and the APT Investment Trust.

Markets quiet on Greece news

The Canadian markets ended Monday mostly quiet with moderate reaction to Greece's election on Sunday.

"There's no really drastic movement in the equities market, but on the back of the volatility, a lot of investors are just sitting on the sidelines," a bond source said. "It's just a wait-and-see kind of day today."

Another bond source said trading activity was minimal.

"Didn't see a whole lot of stuff going on today," a source said. "People are watching the markets bounce around a little bit. It's just quiet."

The Markit CDX Series 18 North American investment-grade index eased 1 bp to a spread of 119 bps.

Government bonds were mixed. Canada's 10-year note yield fell 2 bps to 1.71%. The 30-year bond yield ended flat at 2.34%.

In economic news on Monday, Statistics Canada said non-resident investors acquired $10.2 billion of Canadian securities in April, following a divestment in the previous month. Foreign investors acquired $9 billion of Canadian bonds in April after a $1.2 billion divestment in March.

The agency said Canadian investors' holdings of foreign securities fell $2.7 billion, mostly in divestments of bonds.

Desjardins on tap

Desjardins Group (Aa1/AA-/DBRS: AA-) launched C$1.2 billion of capital shares on Monday to caisse members at C$10 per share to yield no higher than 4.25% plus the Government of Canada benchmark.

Desjardins said in a release that it offered the shares to maintain its strong capitalization level to the financial cooperative members.

Additional information was not immediately available.

Desjardins said that since 1989, members have subscribed for $2.1 billion of shares to help the financial institution meet its capitalization needs.

Levis, Quebec-based Desjardins Group is the leading cooperative financial group in Canada.

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