Barrett Xplore, Lower Mattagami Energy bring deals; Canadian Tire long bonds widen 5 bps

By Cristal Cody

Prospect News, May 12 - Two deals in the Canadian high-yield and high-grade markets kept the primary pace from a standstill, while the deal calendar is expected to fill in over the summer, informed bond sources said Thursday.

"The market is happy to have a period of quiet from the new issues so we can recharge our batteries and get ready for when the new issuance begins again, maybe after the June coupon payment," the source said.

One new deal is expected on Friday from Thompson Creek Metals Co. Inc. The company plans to sell $300 million senior notes due 2018 talked in the 7½% area, a source said.

Barrett Xplore Inc. brought the week's new high-yield deal with the sale of C$230 million of six-year senior secured notes and warrants at par. The notes were seen "trading 101, 102" on Thursday, a source said.

On Thursday, Lower Mattagami Energy LP priced C$475 million in two tranches of senior high-grade bonds at the tight end of guidance, one source said. Both tranches were bid about 2 basis points tighter in the secondary, a source said.

In other activity, Canadian Tire Corp., Ltd.'s long bonds have widened 5 bps on light trading activity since the company announced an acquisition on Monday, a source said.

Canadian government bonds fell, sending yields up about 2 bps. The 10-year bond yield rose 3 bps to 3.23%. The 30-year bond yield ended 2 bps higher at 3.62%.

Treasuries also fell, erasing the previous day's gains on the long end as stocks rallied and the government's auction of 30-year bonds yielded tepid demand. The benchmark 10-year note yield rose 7 bps to 3.22%, and the 30-year bond yield rose 5 bps to 4.35%.

Barrett Xplore prices

Barrett Xplore sold C$230 million of six-year senior secured notes with 508,424 warrants for non-voting common shares in the company at par, according to an informed source on Thursday.

The notes priced with a 13% coupon, but for the first eight interest payments, 4% of the interest may be paid in cash or a combination of notes and cash. Both priced on top of guidance.

The deal priced late Wednesday at a spread of 1,027.6 bps over the Government of Canada benchmark.

The notes and warrants were offered under Rule 144A and Regulation S.

The notes are non-callable until May 15, 2014, then callable at 106.5, 103.35 and par in 2016 and thereafter. The deal also has a three-year 35% equity clawback at 113.00.

UBS Investment Bank was the lead left bookrunner for the offering. BMO Nesbitt Burns was the joint bookrunner.

Proceeds will be used to repay and discharge some credit facility debt, to fund an escrow account for serving certain interest payments on the notes and for general corporate purposes.

In the secondary market, the notes traded higher, a source said.

The Canadian rural broadband provider is based in Woodstock, N.B.

Lower Mattagami sells bonds

Lower Mattagami Energy priced C$475 million in a new two-part private placement sale of senior bonds (A2/DBRS: A) on Thursday, an informed source said.

The deal was "very well-marketed," another bond source said. "It had tremendous oversubscription. The tranches were not that big."

In the first tranche, the company sold C$225 million of 4.331% series 2011-3 notes due May 18, 2021 at par, or a spread of 111.6 bps over the Government of Canada benchmark, tighter than guidance of 114 bps.

The 10-year notes have a call at 22 bps.

In the second tranche, the company sold C$250 million of 5.139% series 2011-4 bonds due May 18, 2041 at par, or a spread of 152 bps over the government benchmark. The bonds were talked at a 154 bps spread.

The long bonds have a call at 38 bps.

BMO Capital Markets Corp. and CIBC World Markets Inc. were the bookrunners. Co-managers were National Bank Financial Inc., RBC Capital Markets Corp., Scotia Capital Inc., TD Securities Inc. and HSBC Capital (Canada) Inc.

Proceeds will be used to refinance outstanding commercial paper notes and to fund redevelopment and expansion costs.

Both tranches firmed in secondary trading, another source said.

"I saw it being bid about 2 bps tighter off the break," the source said.

The company, part of Ontario Power Generation Inc., is a hydroelectric generator located on the Mattagami River.

Canadian Tire bonds widen

Canadian Tire's bonds stayed wider in trading on Thursday, a source said.

On Thursday, Canadian Tire reported that first-quarter profits rose 13% to C$58.4 million. Earlier in the week, the company said it will acquire sporting goods chain Forzani Group Ltd. for C$771 million, or C$26.50 a share, in cash.

Canadian Tire's bonds due 2035 were bid on Thursday at a 254 bps spread, another source said.

The bonds were "probably 5 bps wider from pre-announcing levels," the source said. "Shorter-dated bonds have not moved."

The automotive, outdoor gear and sporting goods retailer is based in Toronto.

Thompson Creek sets talk

Thompson Creek Metals' new offering of $300 million of senior notes due 2018 is talked in the 7½% area, a source said Thursday.

The company launched a roadshow on Monday for the notes (B3), which will be offered in the United States under Rule 144A and outside the United States through Regulation S.

Pricing is expected on Friday.

JPMorgan and Deutsche Bank AG are the bookrunners. Co-managers include BBVA, RBC Capital Markets, UBS Investment Bank.

The deal includes a make-whole call at Treasuries plus 50 bps.

The notes will be guaranteed by subsidiaries Thompson Creek Metals Co. USA, Thompson Creek Mining Co., Thompson Creek Mining Ltd., Langeloth Metallurgical Co. LLC, Terrane Metals Corp., Berg General Partner Corp., Berg Metals LP, Cyprus Thompson Creek Mining Co., Long Creek Mining Co., Blue Pearl Mining Inc., Thompson Creek Services ULC and Mt. Emmons Moly Co.

The proceeds will be used to fund construction and development of the Mt. Milligan copper and gold mine in British Columbia and for general working capital.

The mining company is based in Vancouver, B.C., and Littleton, Colo.

Paul A. Harris contributed to this report

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