Morgan Stanley sells Maple bonds; Vermilion Energy, Paramount Resources plan new notes

By Cristal Cody

Prospect News, Jan. 27 - Morgan Stanley saw strong demand for its upsized sale of C$400 million 4.85% five-year Maple bonds on Thursday, according to sources.

The new Morgan Stanley bond deal helped firm corporate spreads 1 basis point to 2 bps, a source said.

"The tone was quite good. There's been a good amount of activity because we had that deal today," the source said. "Spreads across the board are a little bit tighter on investment grade, and the activity has been a little bit above average."

Also as forecast on Wednesday, a high-yield deal finally emerged in the Canadian bond market.

Vermilion Energy Inc. is scheduled to start a roadshow for C$200 million five-year senior notes (DBRS: BB), informed sources said.

The break may have convinced Paramount Resources Ltd. to re-enter the market. The company plans to reopen its 8.25% senior notes due Dec. 13, 2017 to sell C$50 million to C$75 million at 103, a source said Thursday.

"Look at the States; the pace of issuance has been voracious," a source said. "Here in Canada, we got off to a slow start."

High-yield paper remains in "tight supply," another source said Thursday.

In secondary trading, activity soared again in OPTI Canada Inc.'s bonds, traders said.

Canadian government bonds edged higher following the rally in U.S. Treasuries.

Canada's 10-year bond yield fell to 3.278% from 3.33%. The two-year note yield fell to 1.725% from 1.76%.

No major economic indicators were released in Canada on Thursday. Payroll figures will be released on Friday, and Canada's gross domestic product numbers will be released on Monday.

U.S. Treasuries were higher after the Commerce Department said that durable goods orders fell more than expected by 2.5% in December. Market participants had forecast a 1.5% rise. Initial unemployment claims jumped 51,000 in the previous week, the Labor Department said.

The two-year Treasury note yield fell 4 bps to 0.58%. The benchmark 10-year note yield dropped 3 bps to 3.39%.

The Treasury Department saw strong demand at its final auction of the week. The Treasury sold $29 billion of seven-year notes at a high yield of 2.744%.

Morgan Stanley prices

Morgan Stanley priced an upsized C$400 million of 4.85% five-year Maple bonds (A2/A/DBRS: A) at 99.943 to yield 4.863% on Thursday, an informed source said.

The series F senior debentures due Feb. 3, 2016 priced in line with guidance at a spread of 230 bps over the Government of Canada bond curve.

"The deal went well and priced fairly appropriately," a source said.

The sale was upsized from C$300 million.

Morgan Stanley, BMO Capital Markets Corp., Scotia Capital Inc. and RBC Capital Markets Corp. were the bookrunners.

The financial services company is based in New York City.

Vermilion sets roadshow

Vermilion Energy is scheduled to start a roadshow for C$200 million five-year senior notes (DBRS: BB), informed sources said Thursday.

The roadshow for the notes due Feb. 11, 2016 starts Monday in Vancouver, B.C., and continues through Feb. 3 in Montreal.

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

The notes have a Canada call at 100 bps over the Canadian benchmark. The notes have a change-of-control put at 101%.

The proceeds will be used for repayment of existing debt and for general corporate purposes.

Vermilion Energy is a Calgary, Alta.-based oil and gas producer.

Paramount Resources on tap

Paramount Resources plans to reopen its 8.25% senior notes due Dec. 13, 2017 to sell C$50 million to C$75 million at 103, a source said Thursday.

The notes (Caa2/B+) will be sold under Rule 144A.

The offering has a Canada call at 100 bps over the Government of Canada benchmark and a change-of-control put at 101%.

RBC Capital Markets Corp. is the lead manager.

Paramount Resources originally priced C$300 million of the notes on Nov. 30 at par.

Proceeds will be used for capital expenditures and general corporate purposes.

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

OPTI trades heavy again

OPTI Canada was "definitely The Bond again," said a trader.

He saw about $75 million to $80 million of the company's various issues trading, "all kind of right where they have been."

He pegged the 9% notes due 2012 at 98½ bid, 99½ offered. The 7 7/8% notes due 2014 and the 8¼% notes due 2014 were both at 62 bid, 62½ offered.

Of the 7 7/8s, he said they were "maybe a quarter [point] better," while the 8¼% notes were "maybe a quarter [point] worse, which means they are trading right on top of each other now."

Another trader called both the 7 7/8% and 8¼% notes "roughly a point lower," trading with a 62 handle.

OPTI is a Calgary, Alta.-based oil sands producer.

Stephanie N. Rotondo contributed to this report

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