CIBC, Hydro One, provinces tap Canadian bond markets; primary activity forecast on rise

By Cristal Cody

Prospect News, Jan. 10 - Canadian issuers came out in force on Tuesday with bond offerings from Canadian Imperial Bank of Commerce, Royal Bank of Canada, HSBC Bank Canada, Hydro One Inc. and the provinces of Ontario and Quebec.

It was a "flurry of issuance," a bond source said.

Hydro One launched its deal late in the day.

The banks all brought deposit note offerings. Final sale details from Royal Bank of Canada and HSBC Bank Canada were not available by press time.

More bank offerings may be in the pipeline and a "couple more provinces may look to issue as well if market tone continues to be constructive," a source said. "A lot of things depend on how things shape up in Europe."

Bonds traded better on Tuesday. The Markit CDX Series 17 North American investment-grade index firmed 1 basis point to a spread of 118 bps.

Provincial spreads traded about 1 bp tighter on the day.

Government bonds were mostly flat on the day. Canada's 10-year note yield ended unchanged at 1.97%. The 30-year bond yield rose 1 bp to 2.54%.

CIBC sells C$1 billion

Canadian Imperial Bank of Commerce (Aa2/A+/DBRS: AA) sold C$1 billion in a reopening of 2.65% deposit notes due Nov. 8, 2016 on Tuesday at 99.993 to yield 2.651%, according to a bond source.

The notes priced at a spread of 135 bps over the Government of Canada benchmark.

The issue is non-callable.

CIBC World Markets Inc. was the bookrunner.

The total outstanding is C$2.25 billion.

CIBC is a Toronto-based financial institution.

Hydro One sells 10-years

Late in the day, Hydro One priced C$300 million in an offering of 3.2% medium-term notes due Jan. 13, 2022 at 99.924 to yield 3.209% on Tuesday, a bond source said.

The notes (Aa3/A+/DBRS: A) priced at a spread of 116 bps over the Government of Canada benchmark, compared to talk of 118 bps, plus or minus 2 bps, according to another source.

The issue is redeemable at 29 bps over the Canadian benchmark.

Merrill Lynch Canada Inc. and TD Securities Inc. were the lead managers.

Co-managers were BMO Capital Markets Corp., CIBC World Markets, National Bank Financial Inc., RBC Capital Markets Corp., Scotia Capital Inc., Casgrain & Co. Ltd., HSBC Capital (Canada) Inc. and Laurentian Bank Securities, Inc.

Toronto-based Hydro One provides electricity in the Province of Ontario

Ontario reopens 2022 notes

The Province of Ontario (Aa1/AA-/DBRS: AA) priced C$750 million in a reopening of its 3.15% June 2, 2022 notes at 101.749 to yield 2.953% on Tuesday, according to a bond source.

The bonds priced at a spread of 86.5 bps over the Government of Canada benchmark.

The issue is non-callable.

The managers were Scotia Capital, CIBC World Markets, RBC Capital Markets, BMO Capital Markets, National Bank Financial, TD Securities and Merrill Lynch Canada.

The province originally priced the issue on Nov. 3 in a C$750 million offering at 99.589 to yield 3.196%, or a spread of 87 bps over the government benchmark.

The total outstanding is C$3.25 billion.

Quebec sells C$500 million

The Province of Quebec (Aa2/A+/DBRS: A) priced C$500 million in a reopening of its 3.5% medium-term notes due Dec. 1, 2022 at 103.875 to yield 3.078% on Tuesday, a bond source said.

The notes priced at a spread of 98.5 bps over the Government of Canada benchmark.

National Bank Financial and BMO Capital Markets were the lead managers.

Co-managers included Scotia Capital, CIBC World Markets, RBC Capital Markets, Casgrain & Co., Laurentian Bank Securities, Merrill Lynch Canada and TD Securities.

The notes are non-callable.

Quebec originally sold C$500 million of the issue on Nov. 29 at 100.6 to yield 3.434%, or a spread of 115 bps over the Government of Canada benchmark.

The total outstanding is C$1.5 billion.

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