Quebecor Media, Agrium tap market; Canada Housing Trust offers C$6 billion mortgage bonds

By Cristal Cody

Prospect News, Dec. 15 - Quebecor Media Inc. sold an upsized C$325 million of 7.375% senior notes in the Canadian high-yield market, while Agrium Inc. priced $500 million of 6.125% 30-year senior debentures in the United States on Wednesday, sources said.

Coming up on Thursday, Canada Housing Trust is expected to sell C$6 billion of Canada mortgage bonds due Dec. 15, 2015, an informed source said.

The sale is expected to be the "primary deal in the market" for the remaining days before the holidays, a source said.

Canadian government bonds rose, pushing yields down on stronger economic data. The 10-year note yield fell to 3.322% from 3.34%. The two-year note yield ended at 1.726% from 1.72%.

Statistics Canada said that manufacturing sales rose 1.7% to C$45.5 billion in October.

U.S. industrial production also was better than expected in November, up 0.4%.

Treasuries continued losses on Wednesday, sending the 10-year benchmark note yield up 6 basis points to 3.52% as the U.S. Senate passed the $858 billion tax extensions.

Quebecor Media sells notes

Quebecor Media sold an upsized C$325 million of 7.375% senior notes due Jan. 15, 2021 at par to yield 7.376% on Wednesday, an informed source said.

The notes (B1/B+/DBRS: BB/) priced at a spread of 395.7 bps over the Canadian government benchmark.

The deal was upsized from C$250 million.

Price talk on the notes was pegged at 7.25% to 7.375% yield.

The notes were sold under Rule 144A and have a change-of-control put at 101%.

Scotia Capital Inc., TD Securities Inc. and National Bank Financial Inc. were the joint bookrunners.

Bank of America Merrill Lynch was co-lead manager. Co-managers were RBC Capital Markets Corp., Citigroup Global Markets Inc., BMO Capital Markets Corp., Desjardins Securities Inc., HSBC Capital (Canada) Inc. and CIBC World Markets Inc.

Proceeds will be used by subsidiary Sun Media Corp. to redeem and retire all outstanding Sun Media notes in February and to finance the settlement and termination of related hedging contracts.

Montreal-based Quebecor Media is a subsidiary of Quebecor Inc., one of Canada's largest communications and media companies.

Agrium prices $500 million

Agrium priced $500 million of 6.125% 30-year senior debentures on Wednesday to yield Treasuries plus 160 bps, a source away from the trade said.

The debentures (Baa2/BBB) were sold at 98.909 to yield 6.205%. They have a make-whole call at 25 bps over Treasuries before July 15, 2040. After that they are callable at par until maturity.

The debentures feature a change-of-control put at 101%.

BNP Paribas Securities Corp., RBC Capital Markets Corp. and Scotia Capital USA Inc. were the bookrunners. Lead managers were BMO Capital Markets Corp., National Bank of Canada Financial Securities USA Corp. and Rabo Securities USA Inc.

Co-managers were CIBC World Markets Corp., RBS Securities Inc. and TD Securities USA LLC.

Proceeds are going to repay $125 million of 8.25% debentures due Feb. 15, 2011 and a portion of borrowings under a revolving credit facility incurred in connection with the AWB acquisition.

Agrium's 30-year debentures were seen trading tighter at 155 bps bid, 150 bps offered and later were quoted at 153 bps bid, 151 bps offered, sources said.

The agriculture products and service retailer is based in Calgary, Alta.

RBC sells $650 million

In another U.S. sale, the Royal Bank of Canada priced $650 million of two-year floating-rate senior global notes at par to yield three-month Libor plus 15 bps, according to a 424B2 filing with the Securities and Exchange Commission.

The notes are non-callable.

Agent was RBC Capital Markets Corp.

The financial services company is based in Montreal and Toronto.

Canada Housing sets talk

In what is expected to be the biggest offering of the week, Canada Housing Trust plans to sell C$6 billion of Canada mortgage bonds due Dec. 15, 2015 in the area of 26.5 bps over the Government of Canada benchmark, an informed source said Wednesday.

The notes are expected to price on Thursday and will be sold under Rule 144A.

"The deal looks in excellent shape, with most dealers already long-since sold out of their allotments," a source said.

TD Securities Inc. is the lead manager.

Canada Housing Trust is the financing arm of Ottawa-based Canada Mortgage and Housing Corp.

Investor concern hits OPTI

A trader said "well over $100 million of assorted issues" of OPTI Canada traded during Wednesday's session - and the bonds continued to trade down.

He saw the 8¼% notes due 2014 dropping "almost 2½ points" to 64¾ on "certainly $50-odd million" traded. About "$40-odd million" of the 7 7/8% notes due 2014 changed hands, also lower at 64.

The 9% notes due 2012 - OPTI's first-lien paper - dipped to 98½ bid, 98¾ offered.

"Those had been a steady par bid through all the upheaval before," the trader said. "They should be more than covered."

"Part of it is the official downgrade [by Standard & Poor's announced Tuesday]," he said of the day's hefty trading activity in the credit. The other part was the fact that the Calgary, Alta.-based company "has been in the process of presenting their plan now for months... and nothing has happened.

"People are starting to expect the worst," he added.

Additionally, "there is a whole group of people who still think it is 10 points too high and another group who still think it's fine."

At another shop, a trader said the bonds "continue to get hit," also placing the 8¼% notes around that 84 mark.

In early 2010, OPTI had said it was reviewing its strategic alternatives. As months wore on, it issued new debt, which gave it added liquidity but didn't really improve its overall capital structure.

Just last month, OPTI said its ability to turn a profit depended largely on its Long Lake joint venture with Nexen Inc. However, due to production issues, Nexen warned that production from the project would be less than was previously anticipated.

Andrea Heisinger and Stephanie N. Rotondo contributed to this review

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