Translink sets roadshow for new C$300 million senior debt offering; Canada bonds rally

By Cristal Cody

Prospect News, Oct. 18 - South Coast British Columbia Transportation Authority, or Translink, is expected to hold a roadshow this week for its offering of C$300 million in senior unsecured debt (DBRS: AA) in the Canadian market, a source said Monday.

The roadshow is expected to last through Oct. 22.

"They're just roadshowing all week," the source said.

The deal will be the first long-term debt issued by Translink in its own name, since it previously conducted debt financing through the Municipal Finance Authority of British Columbia.

Proceeds will be used to fund the transportation authority's expansion and operating plan.

Translink is metro Vancouver, B.C.'s regional transportation authority with a web of services such as buses and trains.

In the Canadian corporate bond market, the tone stayed positive on Monday, according to a source.

"The market is better on the back of Citigroup earnings," the source said. "The tone in Canada was good last week and continues to be constructive this week."

The lack of new corporate deals is expected to hold off for about another week, the source said.

"There's quite a few roadshows in the schedule," the source said. "We've had a quiet October so far with earnings season. If it's not this week, it's the week after when a lot of these roadshows could turn into deals."

Data eyed

Economic data on Monday from Statistics Canada showed that foreigners purchased C$10.8 billion in Canadian bonds in August, including C$5.3 billion in corporate bonds, the highest level since November 2009. Most of the investments were led by new deals from resources and transportation firms, Statistics Canada said.

Elsewhere, Canadian government debt rallied a day ahead of the Bank of Canada's policy interest rate announcement set for Tuesday. The Bank of Canada has increased the rate by 25 basis points three times this year but is expected to keep the 1% interest rate unchanged.

The yield on Canada's 10-year bond fell to 2.758% from 2.78%. The Canadian two-year note yield fell to 1.42% from 1.43%.

Bonds also were helped along with the rally in U.S. Treasuries on renewed expectations that the Federal Reserve will take steps to boost the economy.

The U.S. Treasury yield on the 10-year benchmark note fell 5 bps to 2.51%. The market gained fuel from Atlanta Federal Reserve president Dennis Lockhart's public comments on Monday that additional asset buybacks, also known as quantitative easing or QE, offered a good backup step.

"Until we get through the November FOMC meetings and the elections, we will probably see choppy markets as some investors who have participated in the recent trends in equities, debt markets and currencies will liquidate positions in front of the actual decision on worries that either the elections or QE will disappoint," strategists at Confluence Investment Management LLC said in a research note on Monday.

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