Canadian Western Bank sells C$300 million; Canada Housing Trust deal on tap; Connacher up

By Cristal Cody

Prospect News, Sept. 10 - Canadian Western Bank sold a C$300 million offering of three-year deposit notes on Monday with the domestic markets starting the week fairly quiet, according to bond sources.

Primary activity may be muted ahead of the Federal Reserve's policy meeting on Thursday.

"It was very quiet today," a source said. "We think this week could be another fairly quiet week just because the Fed on Thursday could keep some people on the sidelines."

On the corporate side, primary activity may be light over the week with issuance "hard to pin down," another source said.

The provinces also are expected to stay mostly quiet, with more activity forecast for the week of Sept. 17 along with the potential for U.S. dollar deals, a provincial syndicate source said.

Canada Housing Trust plans to bring a new five-year Canada Mortgage Bond offering estimated at C$5 billion to C$5.5 billion the week of Sept. 17, according to an informed bond source.

"The theme is quiet this week, and we'll probably see more action through the CMB and the provinces next week," the source said.

In addition, some provinces are expected to tap the U.S. market over the next few weeks.

"We think U.S. dollars will become typical this month for two or three guys," the provincial source said.

In the secondary market, Connacher Oil & Gas Ltd.'s Canadian and U.S. second-lien notes have gained 4 points from a week ago, a high-yield bond source said on Monday.

In other trading, Postmedia Network Inc.'s 8¼% senior secured first-lien notes due Aug. 16, 2017 are trading slightly higher since the notes priced in August but flat on the week.

The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 95 bps on Monday.

The Markit CDX Series 18 North American high-yield index dropped to 99.88 from 100.07.

Canadian government bonds traded slightly better with yields down 1 bp to 2 bps across the curve. Canada's 10-year note yield dipped 2 bps to 1.83%. The 30-year bond yield fell 1 bp to 2.42%.

Canadian Western Bank prices

In the offering on Monday, Canadian Western Bank (DBRS: A) sold C$300 million of 2.378% three-year deposit notes at par, a syndicate source said.

The notes due Sept. 14, 2015 priced at a spread of 110 bps over the Government of Canada benchmark.

RBC Capital Markets Corp. and BMO Capital Markets Corp. were the bookrunners. Co-managers were Casgrain & Co. Ltd., CIBC World Markets Inc., Laurentian Bank Securities, Inc., National Bank Financial Inc., Scotia Capital Inc. and TD Securities Inc.

The bank was last in the Canadian debt markets on Jan. 13, 2012 with a C$250 million offering of 3.049% deposit notes due Jan. 18, 2017 that priced at par, or a spread of 175 bps over the benchmark.

The Edmonton, Alta.-based bank provides business and personal banking services.

Canada Housing plans CMB deal

Looking ahead, Canada Housing Trust (Aaa/AAA/DBRS: AAA) is expected to bring a new five-year Canada Mortgage Bond offering estimated at C$5 billion to C$5.5 billion the week of Sept. 17, an informed bond source said on Monday.

The trust likely will launch the bonds due Dec. 15, 2017 on Sept. 18 and price the paper on Sept. 19.

The trust is a unit of Canada Mortgage and Housing Corp., which provides financing, mortgage loan insurance, mortgage-backed securities and housing policy and programs.

Connacher up

Connacher Oil's Canadian 8¾% senior notes due 2018 (Caa2/BB-/) are trading higher in the secondary market, up 4 points from a week ago to 104.375, a bond source said on Monday.

The bonds had dropped in August to 79.5 bid after Connacher announced it would sell two oil and gas assets but gave no other strategic plans.

The company sold C$350 million of the notes on May 20, 2011 at par.

The integrated oil company is based in Calgary, Alta.

Postmedia flat

Postmedia Network's 8¼% senior secured first-lien notes due Aug. 16, 2017 traded at 101 bid on Monday, flat from a week ago, a bond source said.

Postmedia Network sold C$250 million of the five-year notes (Ba3/B+/) on Aug. 9 at par.

The company, a subsidiary of Postmedia Network Canada Corp., is a Toronto-based newspaper publisher.

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