bcIMC Realty, AltaLink price; Ontario reopens seven-year issue; OPB Finance plans bonds

By Cristal Cody

Prospect News, June 26 - British Columbia Investment Management Corp. real estate arm bcIMC Realty Corp., AltaLink LP and the Province of Ontario heated up primary action in the Canadian markets with bond deals on Tuesday.

In the corporate markets, bcIMC Realty sold C$500 million in a two-tranche offering of medium-term notes, and AltaLink raised C$300 million of 30-year secured medium-term notes.

On the public sector side, the Province of Ontario priced C$750 million in a reopening of its 4.4% seven-year notes that were last reopened in October.

"It was a non-benchmark term for them up here so it was a little bit of a departure from what they usually do," a bond source said. "The deal went well. There was one large domestic investor that has been buying a lot of that issue over the last few weeks, so that's probably what prompted Ontario to reopen it."

The notes due 2019 traded unchanged in line with other provincial bonds in the secondary market late afternoon.

"Spreads are actually closing the day unchanged completely across the curve and across all names," a source said.

Corporate bonds also ended unchanged. The Markit CDX Series 18 North American investment-grade index was flat at a spread of 119 bps.

Market tone was volatile over the day - "started a little better, then softened a little bit, then came back in to last night's closing," a source said.

Coming up on Wednesday, OPB Finance Trust, a new financing arm of the Ontario Pension Board, is expected to price C$500 million of long bonds.

"It's going to be in the provincial index up here, so it might have some bearing on how provincials trade or perform over the next couple of days," an informed source said. "A lot of people are looking at where it comes and how it trades versus long Ontario's."

Bond issuance in the public sector space is expected to be light the rest of the week.

"The provinces now are about 31% funded, and they're 25% of the way through their fiscal year so they're a little bit ahead of the curve," a source said. "A lot of these guys can afford to wait until there's better conditions."

Government bonds gave back some gains on Tuesday. Canada's 10-year note yield rose 2 bps to 1.75%. The 30-year bond yield ended 3 bps higher at 2.33%.

bcIMC Realty taps market

bcIMC Realty sold C$500 million in two tranches of medium-term notes (DBRS: AA) on Tuesday, a bond source said.

In the first tranche, the company sold C$250 million of 2.65% notes due June 29, 2017 at 99.981 to yield 2.654%, or 135.7 bps over the Government of Canada benchmark.

The second tranche was a C$250 million offering of 3.51% notes due June 29, 2022 priced at 99.975 to yield 3.513%, or 175.5 bps over the government benchmark.

RBC Capital Markets Corp. was the bookrunner.

bcIMC Realty last tapped the debt markets on March 1 in Canada when it sold C$500 million of 2.96% senior medium-term notes due March 7, 2019 (DBRS: AA) at 99.972 to yield 2.966%, or a spread of 135.2 bps over the Government of Canada benchmark.

British Columbia Investment Management is a Province of British Columbia-owned investment management services provider to public-sector pension plans and other public-sector clients.

AltaLink raises C$300 million

Also in Canada, AltaLink sold C$300 million of 3.99% 30-year secured medium-term notes at par, a bond source said.

The notes due June 30, 2042 (/A-/DBRS: A) priced at a spread of 166 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. and Scotia Capital Inc. were the lead managers.

Calgary, Alta.-based AltaLink is an electric power transmission company.

Ontario sells C$750 million

In other pricing activity, the Province of Ontario (Aa2/AA-//DBRS: AA) priced C$750 million in a reopening of its 4.4% seven-year notes at 113.223 to yield 2.322% on Tuesday, according to a bond source.

The notes due June 2, 2019 came at a spread of 84 bps over the Government of Canada benchmark.

RBC Capital Markets was the lead manager.

The province last reopened the issue on Oct. 18, 2011 in a C$1 billion add-on at 110.995 to yield 2.787%, or a spread of 79.5 bps over the Canadian government benchmark.

OPB Finance offers long bonds

On the primary calendar for Wednesday, OPB Finance Trust, a new financing arm of the Ontario Pension Board, is expected to launch and price an offering of C$500 million of long bonds, an informed source said.

The series A debentures (/AAA/DBRS: AA) may be structured as 30-year and 50-year debentures or one tranche of 30-year debt.

TD Securities Inc. and RBC Capital Markets are joint lead managers.

Proceeds will be used to support the Ontario Pension Board's private market investments.

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