Total Capital, Manitoba end busy week; steady deal volume eyed; real estate bonds firm

By Cristal Cody

Prospect News, Jan. 21 - Total Capital SA and Total Capital Canada Ltd. sold an upsized $2 billion of notes (Aa1/AA/AA) in three tranches in the U.S. market, while the Province of Manitoba reopened its 4.1% bonds due March 5, 2041 on Friday, sources said.

The amount of new deals is expected to be stable in the week ahead, a source said.

"This week was definitely a bigger week than normal. Next week should be steady," the source said.

Real estate bond sales were heavy during the week. The new bonds from RioCan Real Estate Investment Trust and First Capital Realty Inc. were seen trading 5 basis points to 10 bps tighter in the secondary markets, sources said.

"The market tone is in very good shape," a trader said. "Things are generally tightened 2 to 3 basis points."

Canadian government bonds were weaker across the curve on stronger economic data. The 10-year bond yield fell to 3.327% from 3.3%. The two-year note yield fell to 1.727% from 1.72%.

Statistics Canada said retail sales rose 1.3% to C$37.3 billion in November, the sixth straight monthly increase and the largest increase since March 2010.

U.S. Treasuries were higher on Friday, sending yields 2 bps to 4 bps lower across the curve. The two-year note yield fell 2 bps to 0.61%. The 10-year benchmark note yield fell 4 bps to 3.41%.

Early in the day, the New York Federal Reserve purchased $8.36 billion of Treasuries due 2018 through 2020 as part of the $600 billion quantitative easing program expected to run through the second quarter. The Federal Reserve plans to buy $7 billion to $9 billion of Treasuries on Monday.

Total units price notes

Total Capital SA and Total Capital Canada sold $2 billion of notes (Aa1/AA/AA) in three tranches on Friday, an informed source said.

The deal size was increased from $1.25 billion in two parts. A $750 million tranche of three-year floating-rate notes was added on reverse inquiry, the source said.

Total Capital Canada was the issuer of both tranches with three-year maturities. Total Capital was the issuer of the 10-year notes.

The $750 million of 1.625% three-year notes priced at 99.796 to yield 1.695% with a spread of Treasuries plus 65 bps. They have a make-whole call at 10 bps over Treasuries.

A $500 million tranche of 4.125% 10-year notes sold at 99.248 to yield 4.218% with a spread of 80 bps over Treasuries. The notes have a make-whole call at 15 bps over Treasuries.

The $750 million of three-year floaters sold at par to yield three-month Libor plus 38 bps.

Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Inc. were the active bookrunners. Passive bookrunners were RBS Securities Inc. and UBS Securities LLC.

Proceeds will be used for general corporate purposes.

The securities are guaranteed by parent oil company Total SA, which is based in Courbevoie, France.

Manitoba reopens 2041 bonds

In a domestic sale, the Province of Manitoba (DBRS: A) sold C$250 million in a reopening of its 4.1% bonds due March 5, 2041 at 92.613 to yield 4.553% on Friday, an informed source said.

The bonds priced at a spread of 79.5 bps over the Government of Canada benchmark.

TD Securities Inc. was the lead manager.

The issue, which originally priced on Sept. 29, 2010 at an 84 bps spread, now has a total of C$550 million outstanding.

Cadillac Fairview firms

The week was busy with three new sales from real estate investment trusts, as well as a C$2 billion deal from Cadillac Fairview Finance Trust, which firmed 1 bp to 2 bps in trading on Friday, a source said.

Cadillac Fairview Finance Trust (/AAA//AAA) priced an upsized C$2 billion in two tranches of senior debentures on Wednesday.

The tranche of C$1.25 billion that was sold in 3.24% series A notes due Jan. 25, 2016 at a spread of 70.9 bps versus the Government of Canada benchmark firmed about 2 bps, the source said.

The second tranche of C$750 million of 4.31% series B notes due Jan. 25, 2021 priced at a spread of 106.6 bps over the Canadian government benchmark.

"The 10 years are in 1 point," the source said.

Cadillac Fairview Finance Trust is the new real estate funding vehicle of the Ontario Teachers Pension Plan Board.

RioCan firms 10 bps

RioCan Real Estate Investment Trust's new bonds were much stronger in secondary trading on Friday, a trader said.

"RioCan's deal was in about 10," the trader said.

The trust priced C$225 million in an upsized sale of 4.499% series O senior unsecured debentures due Jan. 21, 2016 at a spread of 192.9 bps over the Government of Canada benchmark.

The Toronto-based closed-end trust is Canada's largest real estate investment trust focused on shopping centers.

First Capital tighter

First Capital Realty's 5.48% series L debentures due July 30, 2019 (Baa3//DBRS: BBB) sold on Monday narrowed about 5 bps in trading, a source said.

Toronto-based First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore-anchored neighborhood and community shopping centers.

Andrea Heisinger contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.