Royal Bank of Canada sells C$1 billion of notes; roadshow pipeline wakes, Aimia ahead

By Cristal Cody

Prospect News, May 2 - Royal Bank of Canada raised an upsized C$1 billion of seven-year deposit notes on Wednesday, while the roadshow pipeline continues to fill in with potential offerings down the road.

Aimia plans to hold a roadshow in the week ahead in the Canadian high-grade market, a bond source said on Wednesday.

"We do see quite a bit of pipeline on the roadshow side," a bond source said on Wednesday. "We expect a couple drive-by deals by frequent issuers in the Canadian market. But non-financial corporate supply is down, maybe 40% to 50%, versus last year, so the supply is very low."

Battle Creek, Mich.-based Kellogg Co. wrapped a two-day roadshow in Toronto on Wednesday for a potential bond offering. A source said Wednesday the deal may not be a maple issue, which is sold by a foreign issuer, but instead may be priced as a domestic deal issued by a Canadian subsidiary and guaranteed by the parent.

The Auckland Council of New Zealand is holding a roadshow in Canada this week for a potential maple bond deal.

Alberta special purpose entity Capital City Link General Partnership concluded a roadshow on Tuesday for an offering of C$535 million of senior bonds due 2046 (DBRS: A) that are expected to price in early May.

Demand remains strong and market tone is stable considering the volatility surrounding Europe, though issuance was light in March and April. The lack of deals carries "a lot of opportunities for global issuers such as Auckland Council, Korea Gas," a source said.

Korea Gas Corp. (A1/A/A+) held a two-day roadshow in Canada the previous week, and a deal remains on the table.

Canada's high-yield market also has seen light bond issuance this year. One offering came in April from Mississauga, Ont.-based Russel Metals Inc. for C$300 million of 6% 10-year senior notes (Ba1).

Moody's Investors Service said on Wednesday that it will host a Canadian high-yield conference on May 10 in Toronto.

"Market interest in the Canadian high-yield sector has continued to grow in the past couple of years," Don Carter, managing director of Moody's Canada, said in a statement.

Moody's rates more than 80 Canadian speculative-grade issuers that represent more than C$120 billion in rated long-term debt.

Bonds traded mostly flat on Wednesday. The Markit CDX Series 18 North American investment-grade index was unchanged at a spread of 94 basis points.

Canadian government bonds traded about 1 bp better across the curve. The 10-year note yield fell 1 bp to 2.01%. The 30-year bond yield fell to 2.59% from 2.6%.

RBC sells C$1 billion

Royal Bank of Canada (Aa1/AA-/DBRS: AA) priced an upsized C$1 billion of 2.98% seven-year deposit notes at par on Wednesday, a bond source said.

The notes due May 7, 2019 priced at a spread of 120 bps over the Canadian bond curve.

The deal was upsized from C$500 million.

RBC Capital Markets Corp. was the bookrunner.

Toronto-based Royal Bank of Canada is a financial services company.

Aimia plans roadshow

Aimia plans to hold a roadshow in the week ahead in the Canadian high-grade market, a bond source said on Wednesday.

The non-deal fixed-income roadshow will be held in Montreal on Monday and Toronto on Tuesday.

CIBC World Markets Inc., RBC Capital Markets Corp. and TD Securities Inc. are the roadshow organizers.

Montreal-based Aimia, formerly known as Groupe Aeroplan Inc., operates loyalty service management programs, including Aeroplan Canada for flight points on Air Canada and Star Alliance carriers, across the globe.

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