MetLife, First National Financial active; light supply ahead; Canada bank paper firms

By Cristal Cody

Prospect News, Jan. 5 - Metropolitan Life Global Funding I and First National Financial Corp. brought the first new offerings of the year in the Canadian securities markets, sources said Wednesday.

Metropolitan Life Global Funding I sold an upsized C$300 million of Maple bonds a day after the funding arm of insurer Metropolitan Life Insurance Co. sold $1.5 billion of notes in the U.S. markets.

New offerings may be sparse in the investment-grade market in January, a source said.

"New issuance is likely to be steady but not nearly as likely to be as busy as it was in the fall or prior to the holidays," the source said. "We jammed in everything we could prior to the holidays."

Meanwhile, in the Canadian high-yield market, no new sales are expected until late January or early February, an informed source said.

In the secondary market, Bank of Montreal's notes due 2016 sold in December traded about 7 basis points better on the bid side, a trader said.

Also in trading, Quebecor Media Inc.'s senior unsecured notes sold last month traded mostly flat.

Canadian government bonds dropped following U.S. Treasuries after a stronger-than-expected job report helped propel expectations the economy is back on the growth track. ADP Employer Services said private U.S. employers added 297,000 jobs in December, nearly triple the estimate.

The Canadian 10-year bond yield rose to 3.276% from 3.15%. The two-year note yield rose 7 bps to 1.768%.

In economic data, Statistics Canada said that the industrial product price index rose 0.5% in November. Canadian jobs data will be released Friday.

Treasuries are expected to stay pressured until the Labor Department releases the December nonfarm employment report early Friday.

The yield on the 10-year Treasury note jumped to 3.46% from 3.33%. The two-year note rose 8 bps to 0.7%.

MetLife Funding upsizes

Metropolitan Life Global Funding I sold an upsized C$300 million of 3.85% Maple bonds due Jan. 12, 2016 at 99.797 to yield 3.895% on Tuesday, an informed source said.

The issuer upsized the deal from C$200 million.

The bonds (Aa3/AA-) priced in line with guidance at a spread of 131.8 bps versus the Government of Canada benchmark bond, or 129 bps versus the curve.

TD Securities Inc., Bank of America Merrill Lynch and CIBC World Markets Inc. were the joint bookrunners. RBC Capital Markets Corp. and Scotia Capital Inc. were the co-managers.

"This is the first deal of the year," a source said. "There's been some really good buying to start the year in secondary market. Spreads are firming up."

The Maple bonds were seen trading 2 bps tighter at 130 bps bid in the secondary, the source said.

Maple bonds are a Canadian dollar-denominated bond issued by a foreign company.

The unit, based in New York City, last sold bonds in Canada on Jan. 8, 2010, with the sale of C$300 million 2.625% notes due Dec. 3, 2012, priced at 75 bps versus the curve.

On Tuesday, MetLife Global Funding I priced $1.5 billion of notes (Aa3/AA-) in three tranches.

More supply prices

In the second deal in Canada, First National Financial offered C$100 million of series 1 cumulative five-year rate reset class A preferred shares at C$25 per share in Canada on Wednesday, the company announced.

The company offered 4 million preferred shares with a dividend yield of 4.65% for the initial period ending March 31, 2016.

The dividend rate will be reset every five years at a rate equal to the five-year Government of Canada yield plus 207 bps.

RBC Capital Markets Corp. and Scotia Capital Inc. were the lead managers.

The proceeds will be used to repay current debt and for general corporate purposes.

First National Financial is a Toronto-based residential and commercial mortgage lender.

Bank of Montreal firms

The Bank of Montreal's notes due 2016 sold in December are stronger in secondary trading, a trader said.

Bank of Montreal sold C$1.5 billion of 3.49% notes due 2016 on Dec. 9 at a spread of 97.5 bps over the benchmark.

On Wednesday, the notes were seen trading at 90 bps bid, 87 bps offered.

Financial paper in general has firmed on a "good cleanup bid in the last couple of weeks of December," the trader said.

Quebecor Media firms

The notes of Quebecor Media sold in the high-yield market on Dec. 15 were trading Wednesday "slightly better" but still near the sale price, a trader said.

The company sold C$325 million of 7.375% senior unsecured notes due Jan. 15, 2021 at par to yield 7.376%.

"They are slightly better than issue - they're at par and a quarter bid."

Montreal-based Quebecor Media is a subsidiary of communications and media company Quebecor Inc.

Catalyst Paper gains

A trader said that Catalyst Paper Corp.'s bonds moved up, with the Richmond, B.C.-based paper manufacturer's 11% senior secured notes due 2016 up 1 point on the day to around 97½ bid, 98½ offered.

He saw its 7 3/8% notes due 2014 trading between 78 and 80, with "not much trades there."

Catalyst, he said, "has moved up steadily over the last couple of days."

OPTI mostly steady

A trader said that OPTI Canada's bonds remained pretty much within their recent ranges seeing the Calgary, Alta.-based oil-sands energy company's 7 7/8% senior secured notes due 2014 staying around a 711/2-72½ range, on "some trades today, but not much."

He also said the company's 8¼% notes due 2014 saw "a lot more activity," ending at 72¼ bid, 72¾ offered, which he called unchanged to down ½ point.

At another desk, a market source said the latter bonds were ending at 72 13/16 bid, which he called a loss of 11/16 on the session.

However, another market source, while quoting the bonds ending at 72½ bid, called that up nearly a point on a strictly round-lot basis. He noted that large-block activity in the credit was brisk, with over $27 million having changed hands by the end of the day, putting the OPTI issue onto the high yield most-actives list.

-Paul Deckelman contributed to this report

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