Bell Aliant sells preferreds; Ford Trust to price asset-backed notes; energy bonds flat

By Cristal Cody

Prospect News, Feb. 22 - Bell Aliant Inc. announced Tuesday that it sold C$250 million of five-year cumulative rate reset preferred shares.

Separately, Ford Auto Securitization Trust, a unit of Ford Credit Canada Ltd., plans to sell C$572.803 million of series 2011-R1 senior and subordinated asset-backed notes, sources said.

Traders and market participants were getting back to normal on Tuesday after the holiday in the Canadian and U.S. markets on Monday.

A couple of deals are expected to price in the short week, a source said.

"There's a few things being talked about. The relative amount of supply is going to pick up in the next couple of weeks before spring break," the source said.

While U.S. oil prices pushed higher on the revolt in Libya on Tuesday and sent U.S. oil and gas bonds 5 basis points to 15 bps wider, the Canadian oil and gas sector was mostly unchanged, sources said.

The "Canadian market has not really reacted to the oil price spike yet," a source said.

Bonds from Vermilion Energy Inc., Baytex Energy Corp. and Paramount Resources Ltd. were seen "only slightly better bid," the source said.

Another source also said activity in the new bonds from Vermilion Energy and Paramount Resources' 8.25% series 2 senior unsecured notes due Dec. 13, 2017 was flat.

"The float on both of them is so skinny no one's buying or selling," said Mark Wisniewski, a portfolio manager with Gluskin Sheff + Associates Inc. in Toronto.

The investment-grade sector in Canada was "marginally wider," out 1 bp, he said.

Canadian government bonds rallied along with U.S. Treasuries on the Middle East conflict. Canada's 10-year bond yield fell to 3.358% from 3.39%. The two-year note yield dropped to 1.794% from 1.84%.

"Government markets are really rallying on this Middle East flight to quality," a source said.

The 10-year Treasury note yield fell 12 basis points to 3.46% from 3.58%. The two-year note yield dropped 6 bps to 0.69%.

Bell Aliant sells preferreds

Bell Aliant announced Tuesday that it sold C$250 million of five-year cumulative rate reset preferred shares.

The company offered 10 million shares of the series A issue at C$25.00 per share. The preferreds (DBRS: Pfd-3) have a 4.85% dividend rate for the initial five-year period ending March 31, 2016. The preferreds are redeemable on or after March 31, 2016.

The deal includes an over-allotment option of an additional 1.5 million shares.

BMO Capital Markets Corp. and Scotia Capital Inc. were the lead managers.

The preferreds are unconditionally guaranteed by parent Bell Aliant Regional Communications Inc.

Proceeds will be used to fund a $200 million contribution to Bell Aliant's pension plans and for general corporate purposes, including repaying debt under Bell Aliant's commercial paper program.

Bell Aliant is one of North America's largest regional communications providers and serves customers in six Canadian provinces.

Ford Trust plans offering

In new deals ahead in the bond market, Ford Auto Securitization Trust, a unit of Ford Credit Canada Ltd., plans to sell C$572.803 million series 2011-R1 senior and subordinated asset-backed notes, sources said.

The offering includes C$264.011 million of class A1 notes (DBRS: AAA); C$134.463 million of class A2 notes (DBRS: AAA); C$135.02 million of class A3 notes (DBRS: AAA); C$16.847 million of class B notes (DBRS: AA); C$11.231 million of class C notes (DBRS: A) and C$11.231 million of class D notes (DBRS: BBB).

The notes will be sold in Canada and in the United States under Rule 144A. Pricing is expected this week.

RBC Capital Markets Corp., HSBC Capital (Canada) Inc., Bank of America Merrill Lynch and Scotia Capital Inc. are the joint lead managers.

The notes are guaranteed by the Ford Motor Credit Co.

The offering is expected to close March 4. On closing, the trust will acquire a portfolio of retail conditional sale contracts secured by new and used cars, light trucks and utility vehicles from Ford Credit Canada.

The market is looking ahead to the offering, but not all participants plan to get in on the sale.

"Spreads are a little bit tight for us," one source said.

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