Shaw prices; Canadian Capital Auto II, Canada Mortgage on tap; 10-year provincials sought

By Cristal Cody

Prospect News, Feb. 14 - Shaw Communications Inc. sold an upsized C$400 million of long bonds on Monday, kicking off a week with only two other deals on the visible forward calendar.

The Canadian Capital Auto Receivables Asset Trust II plans to sell C$723,646,000 in a three-part sale of asset-backed securities, sources said Monday.

Also on the calendar, Canada Mortgage and Housing Corp. is expected to sell at least C$3 billion in two tranches on Wednesday, a source said.

Meanwhile, bond markets were mostly quiet on Monday, though interest was up in 10-year provincial notes, a source said.

"It was a typical Monday," a source said.

Ten-year provincial bonds ended the day about a half of a basis point tighter.

"The Street seems to be short tens, and investors are coming in secondary trying to pick up 10-year product," the source said. "Fives and longs are fairly unchanged on the day."

Canadian government bonds fell, sending yields higher. The 10-year bond yield rose to 3.488% from 3.47%. The two-year bond yield rose to 1.924% from 1.91%.

Treasury markets were mostly unchanged with shorter-dated bonds down and longer bonds showing slight gains. The yield on the two-year note rose 1 basis point to 0.84%. The 10-year note yield fell 1 bp to 3.62%.

Shaw Communications upsizes

Shaw Communications sold an upsized C$400 million in a reopening of its 6.75% senior notes due Nov. 9, 2039 at 97.379 to yield 6.961% on Monday, an informed source said.

The bonds (Baa3/BBB-/DBRS: BBB) priced at a spread of 307 bps versus the Government of Canada benchmark. The deal was talked at 310 bps and upsized from C$300 million.

The offering has a Canada call at 70 bps over the Government of Canada benchmark.

TD Securities Inc. was the lead manager.

The proceeds will be used to repay debt incurred under Shaw's credit facility and for working capital and general corporate purposes.

A source said the notes were quoted on Friday trading at 295 bps bid, 285 bps offered.

The company originally opened the issue with a sale of C$650 million priced at a 280 bps spread on Nov. 4, 2009. The deal was reopened again with a C$400 million sale on Dec. 2, 2010 at a 330 bps spread.

The issue now has a total outstanding of C$1.45 billion.

Calgary-Alta.-based Shaw Communications provides internet, phone and cable television services.

Asset-backed notes on tap

The Canadian Capital Auto Receivables Asset Trust II plans to sell C$723,646,000 in a three-part sale of asset-backed securities, sources said Monday.

Books were opened Monday afternoon for the series 2011-1 notes (Aaa/AAA). The notes are Rule 144A eligible.

The deal includes a C$300 million tranche of class A1 notes due April 17, 2013, talked at 57 bps over the Canadian bond curve.

The class A2 notes include C$208 million of notes due Aug. 17, 2014 talked at 73 bps over the curve.

Guidance on the C$215,646,000 in the last tranche of class A3 notes due Sept. 17, 2016 is 90 bps over the curve.

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

Toronto-based Canadian Capital Auto Receivables Asset Trust II purchases and manages financial assets acquired from General Motors Acceptance Corp. of Canada Ltd. and its affiliates and borrows funds or sells securities to finance the purchases.

Canada Mortgage offering eyed

Canada Mortgage and Housing is expected to launch a two-tranche offering of fixed- and floating-rate notes on Tuesday that will price on Wednesday, a source said.

The deal is expected to include new fixed-rate notes due June 2021 sized at C$2 billion to C$2.5 billion with guidance at 27.5 bps to 28 bps over the Canadian bond curve.

"We're also expecting a five-year floating-rate note that will be a reopening of their March 2016s, which should be a minimum of C$1 billion," the source said.

The five-year notes were trading Monday at 8 bps over the three-month CDOR, the source said.

Canada Mortgage and Housing offers financing, mortgage loan insurance, mortgage-backed securities and other programs.

OPTI unchanged to lower

OPTI Canada Inc.'s bonds saw "a little trading, but it wasn't that big a deal today," according to a trader.

He said the subordinated issues - the 7 7/8% notes and 8¼% notes due 2014 - "stayed in that" 47½ bid, 48½ offered context.

Another trader, however, called the paper half a point weaker at around 471/2.

On another desk, a trader saw OPTI Canada's 7 7/8% second-lien secured notes due 2014 down around ½ point at 47½ bid, with $15 million changing hands during the session - not much compared with last week's heavy trading in the troubled Calgary, Alta.-based energy company's volatile paper, but a decent amount for a day during which not that much was happening.

The trader saw the company's 8¼% senior unsecured notes also due 2014 were trading "right on top" of the 7 7/8s at 471/2, with more than $10 million trading.

Another trader quoted the 7 7/8s as having retreated to 46¾ bid, 47¾ offered, while seeing the 81/4s at 47 bid, 48 offered, opining that the two issues "are gonna keep dropping."

OPTI's first-lien senior secured notes - the 9% notes due 2012 and the 9¾% notes due 2013 - meantime continued to hover around or just below par bid.

The Calgary, Alta.-based oil sands producer's debt had been gyrating for weeks, as the market waited to see what the fourth-quarter results would look like. The earnings were released on Thursday, and the company warned that its Long Lake joint venture project with Nexen Inc. might not reach previously forecast production levels if operations did not improve soon.

Paul Deckelman and Stephanie N. Rotondo contributed to this review

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