Manitoba sells long-dated bonds; Savanna Energy launches junk deal; Lions Gate upsizes

By Cristal Cody

Prospect News, May 10 - The Province of Manitoba brought a long-dated bond deal in the Canadian provincial bond market, while Lions Gate Entertainment, Inc. priced an upsized $200 million add-on in the U.S. high-yield market, informed bond sources said Tuesday.

Coming up in Canada, Savanna Energy Services Corp. is expected to sell C$125 million in a new high-yield bond deal, according to sources.

In government bond activity, Canadian bonds fell, pushing yields up 5 basis points across the curve, following a gain in equities.

"The data calendar was pretty light. We did see ea bit of a reversal in the risk backdrop as equities rallied in the afternoon session, which weighed on bonds," said Kam Bath, a fixed income strategist with RBC Capital Markets Corp.

Canada's 10-year bond yield rose to 3.25% from 3.19%. The 30-year bond yield rose 4 bps to 3.64%.

Treasuries also slumped. The yield on the 10-year benchmark Treasury note rose to 3.21% from 3.15%. The 30-year bond yield added 4 bps to 4.35%.

The Treasury Department's auction of $32 billion of three-year notes at a yield of 1% on Tuesday was considered decent.

"There was good demand," a source said. "It wasn't a stellar, rock-solid auction, but it was well-subscribed."

The Treasury will sell $24 billion of 10-year notes on Wednesday and $16 billion of 30-year bonds on Thursday.

Manitoba sells $400 million

In the only newly priced bond deal in Canada on Tuesday, the Province of Manitoba (Aa1/AA//DBRS: A) sold C$400 million of 4.4% bonds due March 5, 2042 at 99.738 to yield 4.416%, an informed bond source said.

The bonds priced at a spread of 81 bps over the Government of Canada benchmark.

RBC Capital Markets Corp. was the bookrunner.

Lions Gate upsizes

In the U.S. market, Lions Gate Entertainment priced an upsized $200 million add-on to its 10¼% senior secured second-priority notes due Nov. 1, 2016 (B1/B-) at 102.219 to yield 9 5/8% on Monday, according to market sources.

The yield printed at the wide end of the 9½% price talk.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners for the quick-to-market deal, which was upsized from $150 million.

Proceeds will be used to repay revolver debt and for general corporate purposes.

The issuer is a Vancouver, B.C., developer, producer and distributor of filmed entertainment content.

The original $236 million issue priced at 95.222 to yield 11¼% in October 2009.

Savanna Energy sets roadshow

Coming up, Savanna Energy Services is expected to sell C$125 million in a new high-yield bond deal, according to sources.

The company will hold roadshows in Toronto on Thursday and Montreal on Friday.

TD Securities Inc. and RBC Capital Markets are the managers.

The company then will hold a national investor call on May 16, followed by the release of first quarter earnings on May 17.

The Calgary, Alta.-based company is a drilling and well servicing provider in the oil and gas industry.

Paul A. Harris contributed to this review

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