ANZ Banking sells C$250 million five-year notes; Skylink trades flat, Nortel bonds weaker

By Cristal Cody

Prospect News, April 14 - Australia and New Zealand Banking Group Ltd. came with the lone deal of the day in the Canadian bond market and sold C$250 million 4% Maple bonds due April 28, 2016 on Thursday, an informed source said.

"It was upsized; it went well," said a bond source familiar with the deal.

Corporate bonds ended the day flat, one informed source said.

"Pretty remarkably unchanged," the source said.

In the Canadian high-yield market, trading was flat, according to one source.

Skylink Aviation Inc.'s 12.25% notes due 2016 traded Thursday unchanged at 100.125 bid, 100.625 offered, the source said. The notes (/B/DBRS: B) priced on March 8 at par.

In other trading, Nortel Networks Corp.'s bonds fell on news a mediation process had failed.

Canadian government bonds edged higher, pushing yields down on the day. The 10-year bond yield dropped 2 basis points to 3.36%. The 30-year bond yield fell to 3.77% from 3.79%.

In economic data, Statistics Canada said manufacturing sales fell 1.5% in February to C$47.1 billion.

Treasuries rallied early in the morning on a flight-to-safety bid after reports that Greece may have to restructure its debt.

"Greek credit default swaps have jumped to 1,095 [bps], up 48 bps from yesterday," a source said. "Comments from Germany's finance minister [Wolfgang] Schauble, who suggested that Greece may need to restructure its debt, rocked the market."

Bonds were also helped by early data that showed initial unemployment claims rose 27,000 to 412,000 in the previous week, according to the Labor Department.

The Labor Department said in a separate report that producer prices rose 0.7% in March, higher than forecast.

Treasuries ended the day down, sending yields up, after the government's auction of $13 billion of 30-year bonds. The two-year note yield rose 3 bps to 0.76%. The 10-year note yield rose 4 bps to 3.5%. The 30-year bond yield edged up 1 bp to 4.55%.

ANZ Banking prices

Australia and New Zealand Banking Group sold C$250 million 4% five-year Maple bonds at 99.548 to yield 4.101% on Thursday, an informed source said.

The bonds (Aa1/AA) priced at a spread of 138 bps over the Canadian bond curve, in line with guidance.

The deal was upsized from C$200 million.

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

The notes are non-callable.

The notes were issued under a Canadian private placement wrap under ANZ's June 30, 2010 euro medium-term note program. The bonds were eligible for sale in Canada, Europe and Asia.

The financial services company is based in Docklands, Australia.

Skylink flat

Skylink Aviation's 12.25% notes due 2016 traded Thursday unchanged at 100.125 bid, 100.625 offered, one high-yield bond source said. The notes (/B/DBRS: B) priced on March 8 at par.

Another source in the high-yield market said Skylink's deal "came with a big coupon. It was a small one but it got done, just slightly weaker than others [priced this year]."

The Toronto-based global charter company specializes in emergency airlifts and evacuations and logistical support for governments and corporations.

Nortel drops

Nortel Networks' bonds slid on the news that the Toronto-based communications equipment manufacturer - currently liquidating its operations through the bankruptcy courts in the United States and Canada - had announced the failure of the non-binding mediation process that had been trying to hammer out a formula for the allocation of the sale proceeds of Nortel's various business and asset divestitures.

The mediators were also trying to resolve other inter-estate matters, including inter-company claims.

Nortel warned in its statement of "significant" potential delays in coming up with an acceptable distribution formula in light of the mediation effort's failure, and corresponding lengthy delays in any actual distributions of the bankruptcy estate's proceeds to bondholders and other creditors.

A trader said that Nortel's 10.75% notes due 2016 were down between 1.5 and 2 points at 90 bid, 91 offered, while its floating-rate notes slated to come due later this year were down 1 point at 87.5 bid, 88.5 offered.

Paul Deckelman contributed to this review

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