OPB Finance sells long bonds; John Deere Canada prices; CIT plans ABS deal; AltaLink firms

By Cristal Cody

Prospect News, June 27 - OPB Finance Trust and John Deere Canada Funding Inc. tapped the Canadian provincial and corporate bond markets on Wednesday.

OPB Finance Trust sold C$500 million in two tranches of 30-year and 50-year debentures after it completed a roadshow on Tuesday.

The deal went quite well, an informed bond source said.

"Both books were well oversubscribed," the source said. "The 30-year alone, interest was probably over a billion [dollars]."

In the corporate space, John Deere Canada Funding sold C$250 million of four-year senior medium-term notes, following its $1.6 billion three-tranche offering in the U.S. market on Tuesday.

An offering of asset-backed securities from the Canadian arm of New York-based CIT Group Inc. also is in the works on the back of the company's roadshow in Canada this week.

"It's been a long time since they've been in the Canadian dollar market," a bond source said.

The deal is not considered a maple bond, when a foreign issuer prices debt in Canada, since CIT Group has Canadian financing arms, the source said.

The issue may price on Thursday given the Canadian markets close early on Friday and will be closed on Monday for holiday, the source said. In addition, the U.S. markets will be closed for Independence Day on July 4, which will disrupt market activities.

A U.S. dollar offering also may price on Thursday from Xtreme Drilling and Coil Services Corp., which is marketing $170 million of five-year first-lien notes.

But for the most part, sources do not expect much primary activity until the week of July 9.

"Friday's not closed off but I would be surprised to see anything price," one source said.

The remainder of the week also is expected to be low-key for the public sector market.

"No issuance is expected from the provinces," a source said.

Corporate bonds ended the day slightly better. The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 118 bps.

"It's odd because equities are up a bit, but you also have benchmark bonds in slightly," a source said. "Spreads on the CDX are in about a basis point in North America and 2 basis points in Europe, so overall it's more positive than yesterday or at least Monday."

AltaLink LP's 3.99% medium-term notes due 2042 sold the previous day traded tighter in the secondary market.

Government bonds ended unchanged to moderately better. Canada's 10-year note yield fell 2 bps to 1.73%. The 30-year bond yield ended unchanged at 2.33%.

OPB Finance Trust prices

OPB Finance Trust priced C$500 million in two tranches of series A-B debentures (/AAA/DBRS: AA) on Wednesday after it completed a roadshow on Tuesday, an informed bond source said.

In the first tranche, the trust priced C$350 million of 3.89% debentures due July 4, 2042 at 99.93 to yield 3.894%, or a spread of 157 bps over the Government of Canada benchmark. The bonds were launched at C$300 million on guidance of 160 bps, plus or minus 3 bps.

The 30-year debentures have a Canadian call at 39 bps plus the Government of Canada benchmark.

In the second tranche, the trust sold C$150 million, upsized from C$100 million, of 3.87% debentures due July 4, 2062 at 99.912 to yield 3.874%, or a spread of 155 bps over the government benchmark. The deal was talked at 160 bps, plus or minus 3 bps.

The 50-year debentures have a Canadian call at 38.5 bps over the Government of Canada benchmark.

The debentures are guaranteed by the Ontario Pension Board.

TD Securities Inc. and RBC Capital Markets Corp. were the joint lead managers. CIBC World Markets Inc. was a co-manager.

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

The OPB Finance Trust is a new financing arm of the Ontario Pension Board.

John Deere Canada prices

John Deere Canada Funding sold C$250 million of 2.3% four-year senior medium-term notes to yield 2.306% on Wednesday, a bond source said.

The notes due July 5, 2016 (A2//DBRS: A) priced at a spread of 110.6 bps over the Government of Canada benchmark.

RBC Capital Markets and TD Securities were the bookrunners.

The notes are guaranteed by John Deere Capital Corp.

Proceeds will be used for general corporate purposes.

The company is a Canadian financing arm of John Deere Ltd.

CIT plans ABS deal

New York-based CIT Group (B1/BB-/DBRS: BB) is holding a roadshow in Canada this week through a Canadian financing arm for an offering of asset-backed securities, a bond source said on Wednesday.

No details on terms or price talk have been finalized but the offering likely will be on the short end of the curve, the source said.

Bank of America Merrill Lynch is hosting the roadshow.

CIT Group provides lending, leasing and advisory services to small and middle market businesses.

Xtreme Drilling on tap

Xtreme Drilling and Coil Services is marketing a $170 million offering of five-year first-lien notes with guidance of 8¾% to 9¼%, according to market sources.

The deal is being privately placed with institutional investors by Pareto Securities and could price before the end of the present week.

The notes come with two years of call protection.

Proceeds will be used to repay bank debt.

The Calgary, Alta.-based company provides drilling and coiled tubing services to oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States and Saudi Arabia.

AltaLink firms

AltaLink's 3.99% medium-term notes due 2042 traded 3 bps better to 163 bps bid on Wednesday, a bond source said.

The company sold C$300 million of the series 2012-1 30-year notes (/A-/DBRS: A) at par to yield 166 bps over the Government of Canada benchmark in Canada on Tuesday.

Proceeds will be used primarily to repay outstanding commercial paper.

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

Paul A. Harris contributed to this review

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