IGM upsizes notes; New Brunswick reopens 10-year notes; CIBC sells $1 billion; OPTI firms

By Cristal Cody

Prospect News, Dec. 6 - Monday brought a high-grade note issue from IGM Financial Inc., a reopening from the Province of New Brunswick and one U.S. dollar-denominated sale from Canadian Imperial Bank of Commerce, sources said.

New Brunswick sold C$300 million in the reopening of 4.5% benchmark notes due June 2, 2020.

The notes priced at 104.293 to yield 3.952%, or a spread of 79 basis points over the Government of Canada benchmark.

The issue now has C$1.2 billion outstanding.

RBC Capital Markets Corp., CIBC World Markets Inc. and TD Securities Inc. were the managers.

In the previous week, the Province of British Columbia sold C$600 million in a reopening of its 3.7% 10-year benchmark notes at a spread of 64 bps over the Government of Canada benchmark.

"We have seen some backup in yields and maybe a bit of widening in spreads recently, but overall the market is still relatively receptive," said Douglas Porter, BMO Capital Markets' deputy chief economist.

"It doesn't hurt that this is soon after the big coupon payment in early December, which is twice a year," he said. "There is a lot of cash to be put to work, and that's what makes this time of year relatively positive for provincial issuance."

Government bonds rise

Canadian government bonds closed higher on Monday.

Statistics Canada said Monday that municipalities issued building permits worth $6.2 billion in October, down 6.5% from September, when permits were up 14.9%.

The Canadian 10-year bond yield fell to 3.127% from 3.15%. The two-year bond yield fell to 1.566% from 1.63%.

Market participants expect the Bank of Canada to keep interest rates unchanged on Tuesday. Analysts cite a widespread view on when the bank will raise rates again, with projections from January to September.

"Our view is they'll stay a little bit dovish," Porter said.

Meanwhile, Canadian bonds are being impacted by the Federal Reserve's $600 billion quantitative easing program to buy government debt.

U.S. Treasuries rallied Monday on a renewed stance on the asset buyback program and on sovereign debt concerns in Ireland, Portugal and Spain that spurred investors into safer U.S. debt.

The flight into Treasuries sent the 10-year benchmark note yield back below 3% to 2.93% on Monday. The two-year Treasury note yield fell 4 bps to 0.43%.

Bonds were helped earlier in the day from the Federal Reserve's purchase of $2.044 billion in bonds due 2028 through 2040.

U.S. Federal Reserve chairman Ben Bernanke said on the television show "60 Minutes" broadcast Sunday that the Fed could increase the asset purchases beyond the $600 billion already committed, for a third round of quantitative easing.

The Fed is scheduled to buy another $6 billion to $8 billion in short-dated debt on Tuesday.

IGM upsizes to C$200 million

In corporate deals, IGM Financial sold an upsized C$200 million of 6% 30-year unsecured debentures at 99.737 to yield 6.019%, a source said Monday.

The Canadian financial services company sold the debentures due Dec. 10, 2040 at 240 bps over the Canadian government benchmark bond. The offering was upsized from C$150 million and priced in line with guidance of 240 bps.

BMO Capital Markets Corp. and RBC Capital Markets Corp. were the lead managers.

The Winnipeg, Man.-based company manages more than $124 billion in mutual funds and other managed assets through three subsidiaries, Investors Group Inc., Mackenzie Financial Corp. and Investment Planning Counsel.

Proceeds will be used to supplement the company's financial resources and for general corporate purposes.

CIBC sells $1 billion

In the United States, Canadian Imperial Bank of Commerce priced a benchmark $1 billion of 2.35% five-year notes on Monday to yield 85 bps over Treasuries, an informed source said.

The notes were sold at the tight end of guidance in the 85 bps to 87 bps range.

The non-callable notes (Aa2/A+) priced at 99.897 to yield 2.372%.

Barclays Capital Inc., CIBC World Markets Corp., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the bookrunners.

Proceeds will be added to bank funds and used for general corporate purposes.

The financial services company is based in Toronto.

OPTI Canada active

A trader saw OPTI Canada's 7 7/8% notes due 2014 at 72 bid, 72½ offered, up around 1 point from 71 bid, 72 offered previously. "They had some activity," he said, "a decent amount [of volume]."

He also saw the Calgary, Alta.-based oil sands energy company's 8¼% notes around that same 721/2-73 area, on "some trades, though not much. It seems like the 7 7/8s were more active."

At another desk, the OPTI 7 7/8s were seen up 1¼ points at the 72½ bid level.

Andrea Heisinger and Paul Deckelman contributed to this report

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