Hospital Infrastructure launches C$544 million deal; Algonquin Power wraps sale; bonds flat

By Cristal Cody

Prospect News, July 25 - Hospital Infrastructure Partners Partnership launched an offering of C$544 million of 331/2-year series A senior bonds on Tuesday, an informed source said.

Also in the Canadian markets, Algonquin Power & Utilities Corp. said on Monday that it priced an upsized C$135 million of 5.5% seven-year senior debentures.

Meanwhile, the roadshow for Kruger Products LP ended, and a deal is likely to take place this week.

"Kruger has been talked about. Potentially we're expecting them sometime this week, but they haven't launched," a bond source said on Monday.

Otherwise, the bond markets were quiet in Canada as investors and traders wait for the outcome of the U.S. debt ceiling negotiations in Washington.

"Little trading activity," a bond source said.

Provincial bond spreads were unchanged on the day, while corporate spreads widened 1 basis point to 2 bps, "depending on the name," a source said.

Canadian government bonds ended the day flat, while Treasuries fell on the concern of a U.S. default and credit rating downgrade.

Also, "Moody's downgrading Greece didn't help market tone," a source said.

Canada's 10-year note yield ended unchanged at 2.93%. The 30-year bond also was unchanged at 3.39%.

Hospital Infrastructure deal

Hospital Infrastructure Partners Partnership expects to price C$544 million of 33.5-year series A senior bonds (DBRS: A) on Tuesday, an informed source said.

The deal launched on Monday and is talked in the area of 210 basis points over the Government of Canada benchmark.

Scotia Capital Inc. is the lead manager. National Bank Financial Inc. is a joint lead manager.

The partnership is a special-purpose entity contracted by Halton Healthcare Services to design, build, finance and maintain a new hospital in Oakville, Ont., under a 34-year public-private partnership agreement.

Algonquin Power sells

Algonquin Power & Utilities priced an upsized C$135 million of 5.5% seven-year senior debentures (/BBB-/DBRS: BBB) at 99.828 to yield 5.53%, an informed bond source said on Monday.

The debentures due July 25, 2018 priced at a spread of 302.5 basis points over the Government of Canada benchmark.

The deal was upsized from C$100 million and closed on Monday, the company said.

"We are very pleased to conclude this offering of APCo's inaugural issue of debentures," David Bronicheski, the company's chief financial officer, said in a statement.

"APCo now has a new fixed-income investor base on which to finance the company's strong stable portfolio of assets. We have also strengthened the overall capital structure of APCo with a long-term financing on attractive terms that provides the company with additional financial flexibility to execute on its business plans."

National Bank Financial Inc. and BMO Capital Markets Corp. were the co-lead managers.

Proceeds will be used to repay the project debt on the company's St. Leon Wind Energy facility due in October 2011 and to reduce amounts outstanding under the senior credit facility.

Algonquin Power is an Oakville, Ont.-based open-ended investment trust that owns and operates electric and water utilities in North America.

Kruger Products deal on way

Kruger Products completed its roadshow for an offering of C$150 million of seven-year senior notes (expected ratings /B/DBRS: BB), an informed bond source said Monday.

The notes are due in 2018 and are non-callable for four years. The offering includes a three-year 35% equity clawback and a 101% poison put. The deal also has a Canada call at 50 basis points plus the Canadian benchmark.

The notes are guaranteed by Kruger Products (USA) Inc. and Grupo Tissue de Mexico.

Scotia Capital Inc. is the bookrunner. Co-managers are National Bank Financial Inc., RBC Capital Markets Corp., TD Securities Inc., Bank of America Merrill Lynch, CIBC World Markets Inc., Desjardins Securities Inc., HSBC Capital (Canada) Inc. and Laurentian Bank Securities, Inc.

Proceeds will be used to refinance the company's syndicated credit facility and for general corporate purposes.

Kruger is Canada's leading tissue products producer, with brands that include Cashmere, Purex and Scotties. The company is a subsidiary of Montreal-based pulp and paper producer Kruger Inc.

Catalyst's 7 3/8%, 11% notes

A trader said that Catalyst Paper Corp.'s 7 3/8% notes due 2014 were in a 57-58 range and its 11% senior secured notes due 2016 were at 82-83.

However, unlike sector peer NewPage Corp.'s bonds, which moved up, the trader said that Richmond, B.C.-based papermaker Catalyst's bonds were virtually unchanged.

"It was very quiet in that name today," he said. "I didn't see a whole lot."

OPTI Canada quiet

A trader said that there was "virtually no activity today" in OPTI Canada Inc.'s 8¼% notes and 7 7/8% notes, both due 2014, which had pushed up strongly last week on the news that China's Cnooc global oil operator would buy the troubled Calgary-based oil-sands energy producer.

He saw both bonds trading between 63½ and 65 bid, "unchanged, no activity in either one."

"They are where they are in virtually no trading," the trader added.

Dynegy active

A trader said that Dynegy Holdings, Inc.'s bonds were "definitely actively quoted," with the widely followed 7¾% notes due 2019 bid at 71-72, which he called unchanged but on "decent volume in that issue."

He said that the 7½% notes due 2015 were down perhaps a half-point at 751/2-761/2, although he said that was mostly more quoted than actual trading volume.

Likewise, he said that the Houston-based power generating company's 8 3/8% notes due 2016 lost a half-point, to end at 74 bid, 75 offered, but added that "they were actively quoted, but not a lot of trading, just a couple."

On Friday, Dynegy's bonds had been firmer, despite the news that several hedge funds had filed suit against the company, seeking to block its planned $1.7 billion loan restructuring.

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