RBC, BMW Canada, Wells Fargo Financial Canada, Quebec crowd bond market; trading active

By Cristal Cody

Prospect News, March 23 -The Canadian bond markets saw a rush of deals on Wednesday from corporate and provincial issuers, including BMW Canada Inc., the Royal Bank of Canada, Wells Fargo Financial Canada Corp. and the Province of Quebec.

"It's been a busy day," a source said.

Canada's federal budget was presented on Tuesday, while markets continued to absorb news about Japan and continued unrest in the Middle East.

"We just had so much market volatility last week. We did have a couple of deals this week, AltaGas and First Cap, and the market is open but it probably took a couple of days to make sure the excessive volatility of the previous week had settled down," a source said. "In the U.S., they have seen the same dynamic."

In the secondary market, the new four-year BMW Canada notes were about 2 basis points tighter, while a trader said OPTI Canada Inc.'s 7 7/8% and 8¼% subordinated notes due 2014 were "pretty active," but unchanged at around 531/4.

Canadian government bonds fell, tracking U.S. Treasuries. The 10-year note yield rose 2 bps to 3.21%. The 30-year bond yield was flat at 3.7%.

The Bank of Canada auctioned C$3.2 billion of notes due 2014 to yield an average of 2.022% on Wednesday.

Treasuries fell, sending yields up on the longer end of the curve, as stocks closed better on the day. The 10-year Treasury note yield rose 2 bps to 3.34%. The 30-year bond yield was up 1 bp to 4.44%.

"Treasuries were better until right around 9 o'clock-ish when a bunch of headlines pushed yields up, and they're finishing unchanged," a source said.

RBC sells C$1.1 billion

In the major offering of the day, the Royal Bank of Canada sold an upsized C$1.1 billion of 3.77% notes due March 30, 2018 at 99.988 to yield 3.772%, an informed source said.

The notes (Aaa/AAA//DBRS: AAA) priced at a spread of 87 bps over the Canadian interpolated bond curve from initial guidance of 88 bps.

The deal was upsized from C$650 million.

The bonds were offered in Canada and in Europe on an unlisted private basis.

The bonds have a Canada call at 22 bps over the government benchmark.

RBC Capital Markets Corp. was the lead manager.

The financial services company is based in Toronto.

BMW Canada taps market

BMW Canada (A3) had "strong investor participation" for the sale of C$575 million in two tranches of series B senior notes, a source said.

The books were "well oversubscribed," the source said.

The company sold C$400 million 2.76% notes due April 1, 2014 at 99.98 to yield 2.767%. The notes priced at a spread of 67 bps over the Government of Canada benchmark.

In the second tranche, C$175 million of 3.15% notes due April 1, 2015 priced at 99.996 to yield 3.151%. The notes priced at a spread of 90.6 bps over the government benchmark.

RBC Capital Markets and TD Securities Inc. were the lead managers.

In the secondary market, the notes due April 1, 2015 were seen trading at 89 bps, a source said.

The Richmond Hill, Ont.-based arm of luxury automaker BMW AG operates 40 BMW automobile retail centers and 19 BMW motorcycle retailers in the country.

Wells Fargo sells five-years

The note offering from Wells Fargo Financial Canada (A1/AA-//DBRS: AA) also was upsized.

The company priced C$500 million, upsized from C$300 million, of 3.7% senior notes due March 30, 2016 at 99.959 to yield 3.709%, an informed source said.

The notes priced at a spread of 117 bps over the Canadian bond curve, compared to price talk of 119 bps.

RBC Capital Markets Corp. was the lead manager.

The unit of Wells Fargo & Co. is based in Mississauga, Ont.

Quebec reopens 2041 bonds

The Province of Quebec (Aa2/A+/DBRS: A) sold C$500 million in an add-on to its 5% bonds due Dec. 1, 2041 at 108.04 to yield 4.513% on Wednesday, an informed source said.

The bonds priced at a spread of 82.5 bps versus the Government of Canada benchmark.

National Bank Financial Inc. was the lead manager.

The issue was previously reopened on Jan. 25 to sell C$500 million at a spread of 89 bps over the government benchmark. The total outstanding is now C$6.5 billion.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.