Enbridge sells preferreds; bank paper widens; Ford Credit Canada cheaper; Armtec better

By Cristal Cody

Prospect News, May 11 - The Canadian markets ended the week fairly quiet with one preferred stock deal on Friday, informed sources said.

Enbridge Inc. doubled the size of its offering and priced $400 million of U.S. dollar-denominated preferred shares.

Corporate bonds traded weaker over the day in the aftermath of JPMorgan Chase & Co.'s $2 billion trading loss.

The Markit CDX Series 18 North American investment-grade index eased 6 basis points to a spread of 109 bps.

Bank and financial paper widened an average of 10 bps to 15 bps, traders said.

In the high-yield market, Ford Credit Canada Ltd.'s bonds are trading lower over the week.

Armtec Holdings Ltd.'s bonds rose in trading on Friday following parent Armtec Infrastructure Inc.'s earnings report earlier in the week.

Paramount Resources Ltd.'s bonds also traded better.

Government bonds were stronger on continued European worries despite stronger-than-expected job data. Canada's 10-year note yield fell 3 bps to 1.97%. The 30-year bond yield closed lower at 2.47% from 2.50%.

Statistics Canada said employment rose by 58,000 in April, compared to the forecast of an additional 10,000 jobs.

"It's push and pull right now between some of the domestic data with the job numbers looking good and that was giving a chance for yields to increase," a source said. "But things globally are less than ideal."

Enbridge upsizes

Enbridge announced that it sold $400 million of U.S. dollar-denominated cumulative redeemable preference shares that yield a 4% annual dividend for the initial fixed-rate period to Sept. 1, 2017 in the Canadian market on Friday.

The company sold 16 million shares of series L preferred stock (Baa3/BBB/DBRS: Pfd-2) at $25.00 per share.

The deal was upsized from $200 million, or 8 million shares.

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

The dividend rate will reset on Sept. 1, 2017 and every five years thereafter at a rate equal to the then five-year U.S. Government bond yield plus 3.15%.

The shares are redeemable by Enbridge, at its option, on Sept. 1, 2017 and on Sept. 1 of every fifth year thereafter.

Proceeds will be used to partially fund capital projects, to reduce existing debt and for other general corporate purposes.

Enbridge is a Calgary, Alta.-based oil and gas distributor and transportation company.

Ford Credit Canada cheaper

In the secondary market, Ford Credit Canada's 4 7/8% notes due Feb. 8, 2017 traded at 102.875 bid on Friday, cheaper than its equivalent U.S. paper but still higher than issuance, a trader said.

The company sold C$500 million of the notes (Ba1/BB+/DBRS: BB) at par on Feb. 1.

Ford Credit Canada is the Canadian financing arm of Ford Motor Co.

Armtec rises

Armtec's 8 7/8% senior notes due 2017 (/B-//DBRS: B) rose in trading to 65.5 bid, a trader said on Friday.

The notes were seen at 63 bid on Thursday.

Armtec sold the notes on Sept. 15, 2010 at par.

Guelph, Ont.-based Armtec Infrastructure manufactures and markets industrial infrastructure products and engineered construction solutions.

Paramount Resources higher

Paramount Resources' 8¼% senior notes due 2017 (Caa1/B+) rose to 102.25 bid on Friday, up from 101 bid on Wednesday, a trader said.

The company originally sold C$300 million of the notes on Nov. 30, 2010 at par and reopened the issue on Jan. 28, 2011 to sell C$70 million at 103.

Calgary, Alta.-based Paramount Resources is an oil and natural gas exploration, development and production company.

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