Thompson Creek Metals, British Columbia Municipal Authority price; Savanna Energy on tap

By Cristal Cody

Prospect News, May 13 - In new deals on Friday, Thompson Creek Metals Co. Inc. sold an upsized $350 million in a U.S. dollar-denominated deal and the Municipal Finance Authority of British Columbia priced C$515 million 3% notes due June 1, 2016, informed bond sources said.

Coming up, Savanna Energy Services Corp.'s offering of C$125 million of senior notes due 2018 is expected to price in the May 16 week, one high-yield bond source said.

One other small high-yield deal is expected to be in the market in the next couple of weeks, according to the source.

"There's not enough product with these small deals and unrated deals like Barrett," the source said. "There is a huge appetite still just trying to find the more mainstream product versus these little unrated privates."

Barrett Xplore Inc. sold C$230 million 13% notes due May 15, 2017 and warrants for non-voting common shares in the company at par on Thursday. The Canadian rural broadband provider is based in Woodstock, N.B.

"It's not a broadly marketed high-yield deal. It's getting tucked away," the source said.

In trading, OPTI Canada Inc. lost ground. Those bonds fell about 3 points, falling under the 50 mark. However, there was no fresh news out to drive the debt lower.

Also, in the paper realm, a trader said Catalyst Paper Corp.'s 7 3/8% notes due 2014 were down 3 points to the 61 level. He said there was "no specific news" out on the Richmond, B.C.-based papermaker but speculated the losses were carry-over from negativity related to sector peer NewPage Corp.

Canadian government bonds rose, tracking U.S. Treasuries. Canada's 10-year bond yield fell to 3.197% from 3.22%. The 30-year bond yield closed down 4 basis points to 3.58%.

Treasuries ended the day higher, sending yields down 5 bps on the mid to long range of the bond curve in light activity. The 10-year note yield fell 5 bps to 3.22%, and the 30-year bond yield fell 4 bps to 4.31%.

"We had a fairly bad inflation number today," a trader said. "The year-over-year CPI is up five straight months in a row."

The government said Friday that the Consumer Price Index rose 0.4% in April and the core reading rose 0.2%.

British Columbia prices

The Municipal Finance Authority of British Columbia (Aaa/AAA/AAA) sold C$515 million of 3% notes due June 1, 2016 at 99.866 to yield 3.029% on Friday, an informed bond source said.

The notes priced at a spread of 48 bps over the Government of Canada benchmark.

Scotia Capital Inc. was the bookrunner.

The authority is the financing arm for the province.

Thompson Creek Metals prices

Thompson Creek Metals sold an upsized $350 million of 7.375% senior notes due June 1, 2018 at par, or a spread of 487 bps over Treasuries, on Friday, according to the company and an informed bond source.

The notes (B3/B) had been talked at 7.5%. The private placement deal was upsized from $300 million.

J.P. Morgan Securities LLC and Deutsche Bank AG were the bookrunners. Co-managers included BBVA, RBC Capital Markets Corp., UBS Investment Bank.

The company launched a roadshow on Monday for the Rule 144A and Regulation S offering.

The deal includes a make-whole call at Treasuries plus 50 bps and a 35% three-year equity clawback at 107.375. The notes are non-callable for three years.

The notes will be guaranteed by subsidiaries Thompson Creek Metals Co. USA, Thompson Creek Mining Co., Thompson Creek Mining Ltd., Langeloth Metallurgical Co. LLC, Terrane Metals Corp., Berg General Partner Corp., Berg Metals LP, Cyprus Thompson Creek Mining Co., Long Creek Mining Co., Blue Pearl Mining Inc., Thompson Creek Services ULC and Mt. Emmons Moly Co.

The proceeds will be used to fund construction and development of the Mt. Milligan copper and gold mine in British Columbia and for general working capital.

The mining company is based in Vancouver, B.C., and Littleton, Colo.

Savanna Energy to price

Savanna Energy Services' offering of C$125 million of senior notes due 2018 is expected to price in the May 16 week, informed bond sources said.

The notes (/B+/DBRS: B) likely will sell after the company holds an investors conference call on Monday and releases first-quarter earnings on Tuesday.

"We expect them to be in the market right after that," a source said. "No price talk yet but it's going to go well."

The company held roadshows in Toronto on Thursday and in Montreal on Friday for the deal.

TD Securities Inc. and RBC Capital Markets Corp. are the managers.

Proceeds will be used to pay down a bank facility.

The Calgary, Alta.-based company is a drilling and well-servicing provider in the oil and gas industry.

OPTI subs 'crack'

A trader said OPTI Canada's subordinated notes - the 7 7/8% and 8¼% notes due 2014 - "finally cracked," trading below the 50 mark.

He placed the paper at 47 bid, 48 offered.

"They were drifting and I think people started to wake up to the fact that you have, in a best-case scenario, dead money for a few years and worst case, you have zero," he said.

A second trader said the bonds were trading "plus/minus" 48, noting that he saw a "low tick" of 471/2.

He said the bonds had previously traded around 50 bid, 51 offered.

Yet another source quoted the subordinated paper at 47½ bid, 48½ offered, calling the bonds down 4 points.

There was "no news other than all distressed credits [were] down on light volume today," the third source said. "Not a lot of dealer support would be my guess."

Late last month, the Calgary, Alta.-based oil-sands producer reported its first-quarter earnings and also warned that it would likely not meet its 2011 production target.

For the quarter, OPTI lost C$27 million, or 9 cents per share, versus a loss of C$41 million, or 15 cents per share, the year before.

Revenues were higher at C$63 million and production was 25,000 barrels per day.

OPTI and its Long Lake joint venture partner Nexen Inc. are attempting to hit 72,000 barrels per day.

"We are at a very critical point in OPTI's brief history," Chris Slubicki, chief executive officer, told shareholders at the company's annual general meeting on April 27. "We must complete our strategic alternatives process this year. We must complete an asset or a corporate transaction in 2011 or we will have to recapitalize our balance sheet. The status quo is not sustainable."

Stephanie N. Rotondo contributed to this review

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