Canadian Natural Resources, Province of Alberta upsize debt deals; Bell Canada trades flat

By Cristal Cody

Prospect News, June 14 - Primary activity continued on Thursday ahead of the weekend election in Greece with two Canadian issuers tapping the investment-grade markets in Canada and the United States.

Canadian Natural Resources Ltd. sold an upsized C$500 million of seven-year notes in Canada in its first offering under the Oct. 28, 2011 short form Canadian base shelf prospectus, which allows for up to C$3 billion issuance of debt securities.

The deal priced "at the tight end of initial guidance," a bond source said. "The transaction was met with very strong demand and was upsized from the initial C$300 million minimum."

Also on Thursday, the Province of Alberta sold an upsized U.S. dollar-denominated $600 million of five-year notes.

Corporate and provincial bonds traded tighter on Thursday. The Markit CDX Series 18 North American investment-grade index firmed 4 basis points to a spread of 121 bps.

In the secondary market, Canadian Natural Resources' new notes due 2019 "broke a couple points tighter," a bond source said.

Bell Canada's 3.35% seven-year debentures that priced the previous day traded mostly unchanged in the secondary market on Thursday.

Bank and financial paper was mixed.

Bank of Montreal's 2.5% senior medium-term notes due 2017 eased 2 bps, while Toronto-Dominion Bank's 2.375% notes due 2016 firmed 1 bp in trading.

Canadian government bonds ended weaker in line with U.S. Treasuries. Canada's 10-year note yield rose 3 bps to 1.8%. The 30-year bond yield closed 3 bps higher at 2.38%.

Canadian Natural prices

In Canada's domestic market, Canadian Natural Resources (Baa1/BBB+/DBRS: BBB) sold an upsized C$500 million of 3.05% seven-year notes at 99.937 to yield 3.06% on Thursday, an informed bond source said.

The notes due June 19, 2019 priced at a spread of 155 bps over the Government of Canada benchmark, the tight end of the range of guidance of 160 bps plus or minus 5 bps.

The deal was upsized from C$300 million.

CIBC World Markets Inc. and RBC Capital Markets Corp. were the lead managers. BMO Nesbitt Burns Inc., Scotia Capital Inc., Merrill Lynch Canada Inc., Desjardins Securities Inc. and Altacorp Capital Inc. were the co-managers.

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

Calgary, Alta.-based Canadian Natural is a natural gas and crude oil exploration, production, acquisition and marketing company.

Province of Alberta upsizes

The Province of Alberta sold a U.S. dollar-denominated $600 million of 1% five-year notes (Aaa/AAA//) to yield Treasuries plus 29.45 bps, according to an informed bond source.

The deal was upsized from $500 million.

The Rule 144A and Regulation S-eligible notes due June 21, 2017 were talked at the low to mid single digits early Thursday, compared to initial forecasts on Wednesday of mid to high single digits.

Bank of America Merrill Lynch, CIBC World Markets, RBC Capital Markets and TD Securities Inc. were the lead managers.

Bell Canada unchanged

In Canada's secondary market, Bell Canada's 3.35% series M-25 debentures due June 18, 2019 traded early on Thursday at 185 bps bid, 180 bps offered, a bond source said.

Bell Canada (Baa1/BBB+/DBRS: A) sold C$1 billion of the seven-year debentures at a spread of 185 bps over the Government of Canada benchmark on Wednesday.

The telecommunications company is based in Montreal.

BMO eases

In U.S. trading, Bank of Montreal's 2.5% senior medium-term notes due 2017 eased 2 bps to 113 bps on Thursday, a bond source said.

The issue (Aa2/A+) priced on Jan. 6 in a $1.5 billion offering at a spread of 170 bps over Treasuries.

The financial services company is based in Toronto and Montreal.

TD edges tighter

Also in the secondary, Toronto-Dominion Bank's 2.375% notes due 2016 firmed 1 bp to 93 bps on the day, according to a bond source.

TD sold $600 million of the notes (Aaa/AA-) in a reopening of the issue on Nov. 3, 2011 at 117 bps over Treasuries.

The bank and financial services company is based in Toronto.

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