Canadian issuers prep for U.S., Canada bond deals; Connacher bonds end flat in trading

By Cristal Cody

Prospect News, Jan. 18 - A few deals in the investment-grade and high-yield pipelines are forming in the Canadian bond markets, sources said on Wednesday.

Coming up in the week ahead, Canada's PetroBakken Energy Ltd. plans to sell a U.S. dollar-denominated offering of eight-year senior notes.

On the horizon, Finning International Inc. plans to issue Canadian dollar- and U.S. dollar-denominated debt to fund a $465 million acquisition from Caterpillar Inc.

The Vancouver, B.C.-based heavy equipment dealer (/BBB+/DBRS: A) announced the acquisition on Wednesday.

"We have the ability, and it is our intent to entirely debt finance the deal through the issuance of U.S. and Canadian dollar-denominated debt, and if necessary, we will use our local credit facility in the interim," chief executive officer Mike Waites said during the company's conference call to announce the transaction on Wednesday.

Meanwhile, exact pricing details are "yet to be determined" on Cash Store Financial Services Inc.'s potential high-yield bond offering, an informed source said on Wednesday.

"We're in the middle of roadshows," the source said.

Another high-yield deal may be put on the backburner for a bit. Western Energy Services Corp. held a roadshow, but "there's really nothing going on until we see the docs," a source said.

High-grade and high-yield bonds mostly tightened up on the day in secondary trading, according to sources.

The Markit CDX Series 17 North American investment-grade index firmed 3 basis points to a spread of 110 bps on Wednesday.

"Seems like everything's a bit firmer in conjunction with the move in equities," a high-yield source said.

Connacher Oil & Gas Ltd.'s bonds traded unchanged on Wednesday, a bond source said.

The bonds rose 8 points the previous week after the chief executive officer left the company shortly after the dismissal of three top executives.

"Still in the same ballpark," the source said of the bonds.

Canadian government bonds dropped following the Bank of Canada's monetary policy report on Wednesday, a day after the overnight rate was left unchanged at 1%.

The 10-year note yield rose 4 bps to 1.95%. The 30-year bond yield ended up 2 bps at 2.52%.

PetroBakken kicks off offer

PetroBakken Energy began marketing a $750 million offering of eight-year senior notes (expected ratings Caa1/CCC+) on Wednesday, according to informed sources.

The deal is expected to price mid-to-late in the week ahead.

Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC are the global coordinators and joint bookrunners. RBC Capital Markets is a joint bookrunner.

CIBC World Markets, TD Securities (USA) LLC and Scotia Capital (USA) Inc. are the joint lead managers. HSBC Securities (USA) Inc., Desjardins Capital Markets, Mitsubishi UFJ Securities International plc, SMBC Capital Markets Inc. and SG CIB are the co-managers.

The Rule 144A and Regulation S for life notes come with four years of call protection.

The Calgary, Alta.-based light oil exploration and production company plans to use the proceeds to fund the concurrent partial tender of up to $450 million of its convertible notes maturing in 2016 and to repay a portion of its revolver.

Cash Store roadshow underway

Cash Store Financial Services continues to hold investor presentations in New York for its offering of up to C$125 million of senior secured notes due 2017, a source said Wednesday.

A roadshow started last week in Los Angeles and was held in Canada on Monday. The roadshow is back in the United States with presentations planned for "various other places on the East Coast," the source said.

The deal will be distributed in Canada on a private placement basis and in the U.S. markets under Rule 144A.

Pricing is expected late in the current week or the week of Jan. 23.

Imperial Capital and Canaccord Genuity Corp. are the bookrunners.

Proceeds will be used to purchase loans receivable assets from the company's third-party lenders, for general corporate purposes and to pay fees and expenses.

Edmonton, Alta.-based Cash Store Financial provides broker and short-term lending services.

Western Energy on hold

Western Energy Services started a roadshow Friday for a high-yield bond offering of C$75 million to C$125 million, but no immediate bond deal is yet set, a bond source said on Wednesday.

RBC Capital Markets Corp., ATB Investment Management Inc. and AltaCorp Capital Inc. are the bookrunners.

Western Energy is a Calgary, Alta.-based oilfield drilling company.

Connacher flat

In the secondary market, Connacher's 8¾% senior notes due 2018 (Caa2/BB-/) traded unchanged in the 96.5 area on Wednesday, a source said.

"Nothing's really changed," the source said.

The issue priced on May 20, 2011 at par.

In December, Connacher rejected an unsolicited takeover offer. So far in January, the company has lost its CEO and three top executives.

The integrated oil company is based in Calgary, Alta.

Aleesia Forni and Paul A. Harris contributed to this review

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