Bell Canada sells C$1 billion; telecom deal potential grows; Thompson Creek trades up

By Cristal Cody

Prospect News, May 16 - Bell Canada kicked off the week with an upsized C$1 billion sale of debentures on Monday, informed bond sources said, noting the deal pace is expected to pick up over the week.

"With Bell coming the first day of the week, others could potentially," one source said. "There's been talk of more telco's coming."

In the high-yield market, Savanna Energy Services Corp. is expected to price its C$125 million offering of seven-year senior notes (/B+/DBRS: B) later in the week, a bond source said Monday. No price talk has emerged yet on the notes.

The company held an investors conference call on Monday and will release first-quarter earnings on Tuesday.

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.

In secondary trading, the new bonds from Thompson Creek Metals Co. Inc. traded higher, a source said.

In economic news, Statistics Canada said manufacturing sales in the nation increased 1.9%, or C$877 million, to C$47.5 billion in March after a 1.8% drop in February.

Canadian government bonds were flat on the day. The 10-year bond yield ended unchanged at 3.18%. The 30-year bond yield fell 1 basis point to 3.57%.

Treasuries rose on Monday, sending yields down 1 bp to 4 bps. Yields fell more on the longer end of the curve, with the 10-year note yield down 2 bps at 3.15% and the 30-year bond yield down 4 bps to 4.27%.

Bell Canada sells C$1 billion

In the market on Monday, Bell Canada (Baa1/BBB+/DBRS: A) priced an upsized C$1 billion in two tranches of medium-term debentures, an informed source said.

"The books were pretty good," another bond source said. "They started at C$750 million and both came at the tight end of guidance."

Bell Canada priced C$500 million of 3.65% notes due May 19, 2016 at 99.928 to yield 3.666%, or a spread of 117 bps over the Canadian bond curve. The notes were talked at the 118 bps area.

In the second tranche, the company sold C$500 million 4.95% notes due May 19, 2021 at 99.634 to yield 4.997%. The notes priced at a spread of 182 bps over the curve, compared to talk of 184 bps.

Both tranches were upsized from C$350 million each. The debentures are fully and unconditionally guaranteed by Bell Canada's parent, BCE Inc.

BMO Capital Markets Corp., CIBC World Markets Inc. and TD Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes, including refinancing existing debt.

The telecommunications company is based in Montreal.

Thompson Creek stronger

In the secondary market, the 7.375% senior notes due June 1, 2018 that Thompson Creek Metals priced on Friday rose in trading, a trader said.

The company sold $350 million of 7.375% senior notes due June 1, 2018 at par. On Monday, the notes were quoted at 100.875 bid, 101.25 offered.

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

OPTI unchanged

A trader saw OPTI Canada Inc.'s 7.875% notes due 2014 trading around 47 bid, 49 offered, not far from where the Calgary, Alta.-based oil-sands energy producer's bonds had fallen on Friday, when they declined by 3 points on no fresh news.

Catalyst flat

Catalyst Paper Corp.'s 7.375% notes due 2014 were seen on Monday trading around 60½ to 61.

That's about where the Richmond, B.C.-based papermaker's bonds had traded on Friday.

The Catalyst notes had been trading around the middle 60s last week but fell about 2 or 3 points to the mid-62 range on Thursday, pulled down by generalized investor angst about the paper sector in the wake of the NewPage bond slide - and continued to retreat on Friday, dipping down to the 60 mark before finally coming to rest.

Paul Deckelman contributed to this review

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