Terasen Gas Vancouver Island in market; Capital Power to offer preferreds; Paramount up

By Cristal Cody

Prospect News, Dec. 1 - Terasen Gas Vancouver Island Inc. brought a high-grade deal in Canada, while Capital Power Corp. announced an offering of C$125 million of preferred securities on Wednesday, sources said.

In the Canadian high-yield market, the new 8.25% notes due 2017 from Paramount Resources Ltd. were stronger in the secondary, a source said.

The high yield index is opening up "generally 1 point higher today," an informed source said. The "market has felt like it wanted to rally over the last two days."

Canadian government bonds ended the day lower in line with U.S. Treasuries. No economic data is scheduled until Friday's November jobs report.

The Canadian 10-year bond yield rose to 3.167% from 3.12%. The two-year note yield eased to 1.673% from 1.64%.

U.S. Treasuries slid, sending the 10-year benchmark Treasury note yield to nearly 3% as stocks rallied on stronger data suggesting the U.S. economy is rebounding.

Market movement also was attributed to media reports that indicated the United States would support aid to Europe.

The 10-year Treasury note yield eased to 2.96% from 2.79%. The two-year note yield rose 7 bps to 0.53%.

Terasen sells 5.2% bonds due 2040

Terasen Gas Vancouver Island priced C$100 million of 5.2% medium-term bonds due Dec. 6, 2040 at 99.714 to yield 5.219% on Wednesday, according to an informed source.

The bonds (DBRS: BBBH/A3//) were sold at a spread of 160 basis points over the Government of Canada benchmark bond.

RBC Capital Markets Corp. was the bookrunner.

The Surrey, B.C.-based natural gas company is a subsidiary of gas and electric utility Fortis Inc.

Paramount active

Paramount Resources' new high-yield debt was stronger in the secondary, a source said.

The company sold the upsized C$300 million of 8.25% series 2 senior unsecured notes due Dec. 13, 2017 at par on Tuesday, sources said.

The notes (Caa2/B+/) opened Wednesday at 100.625 bid, 101.625 offered, according to the informed source.

Calgary, Alta.-based Paramount Resources is an oil and natural gas exploration, development and production company.

Capital Power eyes preferreds

In new securities offerings, Capital Power announced on Wednesday that it will sell C$125 million of cumulative rate reset preferred shares that will yield 4.6% per year.

The offering includes 5 million shares of series 1 preferred stock (DBRS: Pfd-3//P-3/) at a price of C$25 per share.

The dividend rate will reset on Dec. 31, 2015 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 217 bps.

Capital Power may redeem the shares on Dec. 31, 2015 and on Dec. 31 of every fifth year thereafter.

TD Securities Inc. and RBC Capital Markets Corp. are the bookrunners.

The sale is expected to close around Dec. 16.

Proceeds will be lent to affiliate Capital Power LP, which will use the funds to repay a portion of the outstanding balance under its credit facilities that were used to fund the acquisition of Island Generation and for general corporate purposes.

Capital Power is an Edmonton, Alta.-based power producer with operations in Canada and the United States.

OPTI recoups losses

OPTI Canada was another busy trader, according to sources, who saw the bonds regaining some ground.

A trader called the bonds a point better with the 8¼% notes due 2014 at 70½ and the 7 7/8% notes due 2014 at 70.

Another trader said about $50 million to $60 million of the various issues traded. He also saw the 8¼% notes around 701/2.

"They had broken below 70 for a few days, but now they are back up," he said.

He placed the 7 7/8% notes "up and down" around 70.

There was no fresh news out on the Calgary, Alta.-based oilsands producer.

Stephanie N. Rotondo contributed to this report

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