Canadian deal calendar stays light; Enbridge sells preferreds; Husky widens; RBC firms

By Cristal Cody

Prospect News, March 20 - Primary activity in Canada's corporate and provincial markets continued to stay on the backburner with schools out on holiday in some provinces.

"It's again very quiet - no new issues," a syndicate source said. "The provinces are tied up in budget season and there are some corporate roadshows this week, but we haven't seen any issuance yet."

Enbridge Inc. tapped the Canadian market on Tuesday for a C$300 million offering of preferred stock. Bonds saw choppy trading over the day.

The Markit CDX Series 18 North American investment-grade index eased 3 basis points to a spread of 88 bps.

Husky Energy Inc.'s bonds, which priced in the U.S. investment-grade market the previous day, widened about 2 bps in secondary trading.

Canadian bank paper traded mostly unchanged to slightly better.

Royal Bank of Canada's short-dated notes firmed 5 bps in the U.S. secondary market.

Viterra Inc.'s stock closed 6 cents lower to C$15.91 a share on the announcement that Glencore International plc will acquire the company for C$16.25 a share. The acquisition is in partnership with Agrium Inc. and Richardson International Ltd.

Regina, Sask.-based Viterra's bonds traded mostly unchanged on reports last week that several companies had expressed an interest in purchasing the grain company.

Government bonds closed weaker with yields higher in light trading flow. Canada's 10-year note yield rose 3 bps to 2.28%. The 30-year bond yield edged up 1 bp to 2.8%.

"Bonds were pretty much following the U.S. but outperforming," a source said. "Provincial spreads are wider. Fives and 10s are about a basis point wider; longs are unchanged."

Enbridge sells C$300 million

Enbridge announced on Tuesday that it sold C$300 million of cumulative redeemable preference shares to yield 4% for the initial fixed-rate period up to Sept. 1, 2018.

The company sold 12 million shares of the series H preferred stock (Baa3/BBB/DBRS: Pfd-2) at C$25.00 per share.

The dividend rate will reset on Sept. 1, 2018 and every five years at a rate equal to the then five-year Government of Canada bond yield plus 212 bps.

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

The offering includes an over-allotment option of an additional 2 million shares, or C$50 million.

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.

Husky eases

Husky Energy's 3.95% senior notes due 2022 traded wider at 162 bps bid, 159 bps offered on Tuesday, a trader said.

The company sold $500 million of the 10-year notes (Baa2/BBB+/) at Treasuries plus 160 bps on Monday.

Husky had not been in the U.S. market with a bond offering since May 6, 2009 when the company sold $1.5 billion of five- and 10-year notes.

The petroleum company is based in Calgary, Alta.

Royal Bank of Canada firms

In other trading, Royal Bank of Canada's 1.45% notes due 2014 (Aa1/AA-/AA) firmed 5 bps to 60 bps on Tuesday in the U.S. high-grade market, according to a bond source.

The Royal Bank of Canada sold $1.25 billion of the senior notes on Oct. 26 at a spread of Treasuries plus 105 bps.

The financial services company is based in Toronto.

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