Bell Canada sells C$1 billion; municipal offerings pick up, Precision Drilling plans deal

By Cristal Cody

Prospect News, March 9 - Bell Canada tapped the bond market with the largest offering of the day - C$1 billion of 4.4% seven-year medium-term debentures.

Canada's municipal bond market also is starting to heat up with the second sale of the week on Wednesday. Ville de Montreal sold an upsized C$350 million offering of 4.5% notes due Dec. 1, 2021, a day after the Regional Municipality of Peel in Ontario sold C$200 million in a reopening of 5.1% bonds due June 29, 2040.

Other municipal issuers also are rumored to be planning deals, including the York Region in Ontario, according to sources.

In the high-yield market, Precision Drilling Corp. announced plans to sell C$200 million of senior notes due 2019 in Canada.

Canadian government bonds rallied, sending yields down across the curve. The 10-year bond yield fell 5 basis points to 3.35%. The 30-year bond yield dropped to 3.79% from 3.85%.

U.S. Treasuries also rallied on violence in Libya, while the U.S. government received good demand for the second auction of the week. The 10-year Treasury benchmark note dropped to 3.47% from 3.55%. The 30-year bond yield fell 6 bps to 4.6%.

The Treasury Department sold $21 billion in a reopening of 10-year notes at a yield of 3.499%. The government will hold the final auction on Thursday with the sale of $13 billion in a reopening of 30-year bonds.

Bell Canada sells C$1 billion

Bell Canada (Baa1/BBB+/DBRS: A) sold C$1 billion 4.4% medium-term debentures, series M-22, due March 16, 2018 at 99.916 to yield 4.414% on Wednesday, a source said.

The debentures priced in line with guidance at a spread of 140 bps versus the Canadian bond curve. The debt has a change-of-control put at 101% and a Canada call at 35 bps over the government benchmark.

The debentures are guaranteed by Bell Canada's Montreal-based parent company, BCE Inc.

Bank of America Merrill Lynch, RBC Capital Markets Corp. and Scotia Capital Inc. were lead managers. Co-managers were BMO Capital Markets Corp., CIBC World Markets Inc., Desjardins Securities Inc., National Bank Financial Inc., TD Securities Inc. and Casgrain & Co. Ltd.

The proceeds will be used in the financing of the acquisition of CTVglobemedia Inc., which is expected to close early in the second quarter of 2011.

Ville de Montreal prices

Ville de Montreal (Aa2/A+/) priced an upsized C$350 million offering of 4.5% notes due Dec. 1, 2021 at 99.306 to yield 4.582%, a source said.

The notes priced at a spread of 108 bps over the Government of Canada benchmark, slightly wider than initial guidance of 107.5 bps over. The deal was upsized from C$300 million.

National Bank Financial Inc., Desjardins Securities Inc. and CIBC World Markets Inc. were the joint bookrunners.

Precision Drilling on tap

In new deals expected later in the week, Precision Drilling on Wednesday announced a high-yield offering of C$200 million of senior notes due 2019 (Ba2/BB+) in Canada.

RBC Capital Markets Corp., Credit Suisse and TD Securities Inc. are the lead managers.

Pricing is expected on Thursday or Friday.

The proceeds, along with available cash, will be used to repay outstanding debt under the company's senior secured revolving credit facilities.

Precision is a Calgary, Alta.-based equipment and services provider for the oil and gas industry.

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