Scotiabank sells C$1.5 billion debt, Swedish Export Credit prices; TransCanada, MEG better

By Cristal Cody

Prospect News, July 31 - Bank of Nova Scotia sold C$1.5 billion of subordinated debentures on Tuesday just days after Standard & Poor's downgraded the bank's outlook to negative.

Scotiabank's offering was oversubscribed and "upsized substantially despite S&P giving a negative outlook last Friday," one bond source said.

S&P lowered its outlook for seven Canadian banks, including Scotiabank, to negative from stable.

Also on Tuesday, AB Svenska Exportkredit, known as Swedish Export Credit Corp., priced C$100 million of four-year notes in the European market.

Primary activity is forecast as light for the short holiday week. The Canadian markets close early on Friday and will close on Monday for a civic holiday.

"Corporates are getting into holiday mode," one bond source said. "There's just not a huge pipeline. Some people are looking at the market but I don't think there's going to be the usual rush."

Another bond source also does not expect much deal action.

"It's probably going to be a quiet week," the source said.

Market tone improved with bond spreads 1 basis point to 2 bps better on the day.

"Credit's in good spirits," a source said, adding it was "stable to slightly better."

TransCanada Pipelines Ltd.'s notes firmed about 4 bps in secondary trading on Tuesday.

Teck Resources Ltd.'s three tranches were mixed with the short-dated notes stronger and the longer-dated debt weaker.

MEG Energy Corp.'s senior notes sold earlier in the month traded higher.

The Markit CDX Series 18 North American investment-grade index eased 2 bps to a spread of 108 bps.

The Markit CDX Series 18 North American high-yield index dropped to 96.78 from 97.30.

Canadian government bonds ended slightly better. The 10-year note yield fell 2 bps to 1.68%. The 30-year bond yield dropped 3 bps to 2.27%.

Statistics Canada said in a report on Tuesday that the real gross domestic product edged up 0.1% in May following a 0.3% increase in April.

Bank of Nova Scotia prices

Bank of Nova Scotia (Aa1/AA-/DBRS: AA) sold an upsized C$1.5 billion of subordinated debentures at par to yield 2.898% on Tuesday, an informed bond source said.

The debentures priced at a spread of 157 bps over the Canadian bond curve, or 158.2 bps over the Government of Canada benchmark.

The deal was launched at C$1 billion on guidance of 159 bps, plus or minus 3 bps.

The fixed-to-floating rate debentures have an early maturity of Aug. 3, 2017 and a final maturity of Aug. 3, 2022. The coupon will reset on Aug. 3, 2017 at the three-month Canadian Dealer Offered Rate plus 125.5 bps.

The debentures are redeemable at the bank's option at par on or after Aug. 3, 2017.

Scotia Capital Inc. was the bookrunner.

The issue priced under Scotiabank's June 8 base shelf prospectus.

Toronto-based Bank of Nova Scotia is a global financial services provider.

Swedish Export Credit prices

AB Svenska Exportkredit, also known as Swedish Export Credit, priced C$100 million of 2% notes due Aug. 10, 2016 at 101.134 to yield 2.07% in a European offering on Tuesday, an informed bond source said.

The issuer (Aa1/AA+/) sold the notes at a spread of 84 bps over the Canadian government benchmark.

TD Securities Inc. was the lead manager.

The issuer held a roadshow the week of May 14 in the Canadian market.

Stockholm-based Swedish Export Credit is an international financing services company.

TransCanada Pipelines firms

TransCanada Pipelines' 2.5% senior notes due 2022 tightened to 96 bps bid, 93 bps offered on Tuesday, a trader said.

TransCanada Pipelines sold $1 billion of the 10-year senior notes (A3/A-/DBRS: A) on Monday to yield Treasuries plus 100 bps.

The natural gas and oil pipeline is based in Calgary, Alta.

Teck mixed

Teck Resources' new notes were mixed in trading on Tuesday following the $1.75 billion offering of notes (Baa2/BBB/DBRS: BBB) in three tranches on Monday, a trader said.

The company's 2.5% notes due 2018 firmed to 187 bps bid, 183 bps offered from the issue spread of Treasuries plus 195 bps.

The 3.75% notes due 2023 edged 1 bp wider to 236 bps bid, 232 bps offered. Teck sold $750 million of the notes at a spread of 235 bps over Treasuries.

The long tranche of 5.4% bonds due 2043 traded going out wider at 289 bps bid, 284 bps offered in secondary trading. Teck sold $500 million of the bonds at a spread of Treasuries plus 285 bps.

The mining company is based in Vancouver, B.C.

MEG Energy rises

MEG Energy's 6 3/8% senior notes due 2023 are trading stronger, seen going out at 102 bid, 103 offered on Tuesday, a trader said.

The company sold the notes (B1/BB) at par on July 16.

The Calgary, Alta.-based oil sands development company plans to use the proceeds for general corporate purposes, including funding capital investments.

© 2015 Prospect News.
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