Ontario, CI Investments price bonds; Bank of Montreal, Eagle Credit Card Trust plan deals

By Cristal Cody

Prospect News, Dec. 7 - CI Investments Inc. and the Province of Ontario wrapped sales on Tuesday, and new offerings are expected this week from the Bank of Montreal and Eagle Credit Card Trust, sources said.

The Province of Ontario sold C$750 million in a reopening of its 3.15% notes due Sept. 8, 2015 at 101.943 to yield 2.71%, a source said.

The notes priced at a spread of 46 basis points over the Government of Canada benchmark bond.

TD Securities Inc. was the lead manager.

The sale was the third provincial sale in a week.

"We're coming off of a lull in provincial issuance," said Warren Lovely, a government-debt strategist for CIBC Macro Strategy, a research group at Canadian Imperial Bank of Commerce in Toronto. "With the number of midyear reports out of the way, provincial governments are re-accelerating in terms of bond issuance."

On Monday, the Province of New Brunswick sold C$300 million in a reopening of 4.5% benchmark notes due June 2, 2020 at a spread of 79 bps over the Government of Canada benchmark.

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 had an exceptionally quiet and unusually light November that is giving way to a more active December, at least until the holidays set in," Lovely said.

In Canadian government bonds, debt sold off sharply Tuesday following the sell-off in U.S. Treasuries on President Obama's proposed tax-cut extensions. The 10-year Canadian bond yield rose to 3.221% from 3.17%. The two-year note yield eased to 1.628% from 1.58%.

On Tuesday, the Bank of Canada left its interest rates unchanged as expected, which "restrained the sell-off in the Canada bond market," said Eric Lascelles, chief Canada macro strategist at TD Securities Inc. in Toronto.

"It comes down to the Bank of Canada sentiment being more cautious," he said. "Canada may have to push through softish data the next several days. Trading could be weak."

U.S. stocks rallied while investors fled Treasuries and sent yields soaring. The 10-year benchmark note yield ended the day up 21 bps at 3.14%. The yield on the two-year Treasury note rose 10 bps to 0.52%.

CI sells C$300 million

CI Investments sold C$300 million of 3.94% debentures due 2016, a source said Tuesday and according to a release from parent company CI Financial Corp.

The debentures (DBRS: A//BBB+/) priced at a spread of 150 bps over the Canadian government benchmark, compared with price talk of 152 bps.

This is the first debt offering from CI Investments, and the company said the issue was oversubscribed by investors.

"We believe the exceptional demand for this offering reflects the market's confidence in the strength and stability of CI, and it leaves CI well positioned to pursue strategic opportunities in 2011," Stephen A. MacPhail, CI president and chief executive officer, said in a statement.

Scotia Capital Inc. and CIBC World Markets Inc. were the lead managers.

The debentures will bear a fixed rate until Dec. 13, 2015 and, thereafter, a floating rate based on three-month CDOR.

Proceeds will be used to pay for the acquisition of Hartford Investments Canada Corp., which is scheduled to close on or about Dec. 15, and to pay down amounts owing under the CI credit facility and for general corporate purposes.

CI Investments is a Toronto-based investment management firm with about $67 billion in assets.

Bank of Montreal to sell

The Bank of Montreal plans to sell C$1.25 billion in two tranches of notes, an informed source said Tuesday.

The offering includes C$350 million of notes due Dec. 10, 2012 talked in the 35 bps area and C$900 million of notes due June 10, 2016 talked in the 100 bps area.

BMO Nesbitt Burns Inc. is the manager of the sale.

BMO Financial Group operates investment dealer BMO Capital Markets and the Bank of Montreal in Canada and Harris in the United States.

Eagle to sell two tranches

In other new deals, Eagle Credit Card Trust intends to sell two tranches of credit card receivables-backed notes, sources said Tuesday.

DBRS assigned AAA ratings to the offering, which includes series 2010-1 notes due Dec. 17, 2013 and series 2010-2 notes due Dec. 17, 2015.

CIBC World Markets Inc. and RBC Dominion Securities Inc. are the managers.

Proceeds will be used to finance the purchase of undivided co-ownership interests in the receivables of credit card accounts designated by President's Choice Bank.

Toronto-based Eagle Credit Card Trust manages the credit card receivables from President's Choice Bank, a subsidiary of Loblaw Cos.

OPTI bonds drift lower

Elsewhere in the Canadian market, a trader said OPTI Canada Inc. bonds were "pretty active," although he noted that the notes had "drifted in" by the end of business.

He said the 8¼% notes due 2014 opened near 73½ but closed closer to 71 bid, 72 offered.

Another trader called the notes down half a point around 72.

On Tuesday, the Calgary, Alta.-based oil sands producer announced its 2011 capital program, which includes about C$150 million of capital expenditures. Of that number, C$122 million is expected to be used on the company's joint venture with Nexen Inc., the Long Lake Project.

At a credit conference last month, both Nexen and OPTI told conference attendees that production at the project would be less than previously estimated. However, OPTI also noted that its ability to post a profit would largely depend on how the project fared.

Additionally, OPTI has been considering its strategic options for the better part of the year.

Stephanie N. Rotondo contributed to this review

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