BAA Funding, APT Pipelines, RioCan REIT all bring seven-year term deals; corporates weaker

By Cristal Cody

Prospect News, June 21 - Three issuers, including two foreign companies, tapped the Canadian markets with upsized seven-year note offerings on Thursday, informed sources said.

BAA Funding Ltd. sold C$400 million of 4% seven-year maple bonds, APT Pipelines Ltd. priced C$300 million of 4.245% seven-year maple bonds and RioCan Real Estate Investment Trust sold C$150 million of 3.85% seven-year senior debentures.

The deals from APT Pipelines and RioCan REIT "came with small room to grow and both upsized a little bit, not massively but a little bit," a syndicate source said.

Canadian corporate bonds ended mostly flat, a source said. Bonds overall were wider on Thursday after trading tighter in Wednesday's session. The Markit CDX Series 18 North American investment-grade index eased 4 basis points to a spread of 118 bps.

Canadian Pacific Railway Ltd.'s bonds traded unchanged on the day.

Government bonds moved higher across the curve. Canada's 10-year note yield fell 3 bps to 1.75%. The 30-year bond yield dropped 4 bps to 2.32%.

BAA raises C$400 million

BAA Funding sold an upsized C$400 million of 4% seven-year class A senior secured notes in Canada on Thursday at 99.367 to yield 4.105%, an informed bond source said.

The notes due July 3, 2019 (/A-/A-) priced at a spread of 264 bps over the Government of Canada benchmark, compared to guidance of 265 bps over the Canadian government benchmark.

The deal was upsized from C$350 million and offered in a private placement in Canada and in the U.S. markets under Regulation S.

Bank of America Merrill Lynch, CIBC World Markets Inc. and RBC Capital Markets Corp. were the bookrunners. HSBC Capital (Canada) Inc. was a joint lead and passive bookrunner.

The holding company for London-based airport operator BAA Airports tapped the U.S. high-grade markets in a private sale on Monday for $500 million of 2.5% three-year senior secured notes (/A-/A-) priced at 99.928 to yield 2.525% with a spread of Treasuries plus 215 bps.

APT Pipelines prices bonds

APT Pipelines (Baa2/BBB/), an entity of Australian energy infrastructure company APA Group, was widely expected to price a deal this week after it held a roadshow in Canada the previous week.

The company sold C$300 million of 4.245% seven-year maple bonds in Canada on Thursday at 99.997 to yield 4.246%, an informed bond source said.

APT Pipelines sold the medium-term notes due July 24, 2019 at a spread of 276.3 bps over the Government of Canada benchmark.

Scotia Capital Inc. was the bookrunner.

Sydney-based APA Group, which is made up of the Australian Pipeline Trust and the APT Investment Trust, is Australia's natural gas infrastructure company.

RioCan sells C$150 million

RioCan Real Estate Investment Trust sold an upsized C$150 million of 3.85% seven-year senior debentures at 100.335 to yield 3.795% on Thursday, according to an informed bond source.

The sale of the series Q debentures (/expected BBB-/DBRS: BBB) due June 28, 2019 was upsized from C$125 million.

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

The proceeds will be used to repay debt, for property acquisitions, to fund development and for general trust purposes.

The trust last tapped the Canadian debt markets on Jan. 19 with a C$150 million offering of 3.8% debentures due March 1, 2017 (DBRS: BBB) priced at 99.916 to yield 3.819%.

Toronto-based RioCan REIT is Canada's largest real estate investment trust.

Canadian Pacific Railway flat

In the secondary market, Canadian Pacific Railway's 4.5% notes due 2022 ended flat at 184 bps, a bond source said.

Canadian Pacific Railway sold $250 million of the 10-year notes (Baa3/BBB-/) on Nov. 28, 2011 at a spread of Treasuries plus 275 bps.

The railroad operator is based in Calgary, Alta.

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