Shaw Communications, Guelph Hydro complete sales; Trinidad Drilling to sell $450 million

By Cristal Cody

Prospect News, Dec. 2 - The Canadian bond market continued to have a good tone on Thursday with two sales - from Guelph Hydro Electric Systems Inc. and Shaw Communications Inc., which upsized its offering to C$900 million, sources said.

"Corps are generally a little bit better," a source said.

Meanwhile, Trinidad Drilling Ltd. announced plans to sell $450 million in senior unsecured notes due January 2019 in a U.S.-dollar denominated offering.

Elsewhere in the Canadian market, TransAlta Corp. sold C$200 million of preferred shares on the heels of a preferred sale by Capital Power Corp.

Canadian government bonds fell, sending yields up in line with U.S. Treasuries on a lack of economic data. The yield on the 10-year bond rose to 3.2% from 3.19%. The two-year note yield fell to 1.68% from 1.69%.

Statistics Canada is expected to release the monthly jobs report on Friday.

U.S. Treasuries ended lower, sending the 10-year benchmark note yield up 4 basis points to 3.00%, as traders squared positions ahead of Friday's Labor Department jobs report. The yield on the two-year note eased 1 bps to 0.54%.

Shaw upsizes to C$900 million

Shaw Communications upsized its offering by C$100 million to C$900 million and sold two tranches of senior notes (DBRS: BBB/Baa3/BBB-/) on Thursday, an informed source said.

The tranche of C$500 million of 5.5% notes due Dec. 7, 2020 priced at 99.635 to yield 5.548%.

The bonds priced in line with guidance of a spread of 235 bps over the Government of Canada benchmark bond.

In a second tranche, Shaw priced a reopened C$400 million tranche, upsized from C$300 million, of the company's 6.75% bonds due Nov. 9, 2039. The bonds priced at 97.356 to yield 6.963%, or a spread of 330 bps over the Canadian government benchmark. The tranche was talked in the 330 bps area.

TD Securities Inc. and Scotia Capital Inc. were the bookrunners.

Proceeds will be used to repay debt incurred to complete the acquisition of Canwest Global Communications Corp.'s television assets and other refinancing.

Calgary, Alta.-based Shaw Communications provides internet, phone and cable television services.

Guelph Hydro Electric prices

Also in the Canadian bond market, Guelph Hydro Electric Systems priced C$65 million of 5.264% series A senior debentures due Dec. 6, 2030, an informed source said Thursday.

The debentures (/A/) priced at par.

CIBC World Markets Inc. managed the sale.

Proceeds will be used to repay debt and to fund operational improvements.

The company, a subsidiary of Guelph Hydro Inc., is the electricity utility for the towns of Guelph and Rockwood in Ontario.

Preferreds price

In preferred sales, TransAlta sold C$200 million of preferred securities to yield 4.6% for the initial period ending March 31, 2016, according to a company statement.

The company offered 8 million cumulative rate reset first preferred shares from series A at a price of C$25.00 per share.

The dividend rate will reset every five years at a rate equal to the five-year Government of Canada bond yield plus 203 bps.

CIBC World Markets Inc., RBC Capital Markets and Scotia Capital Inc. are the bookrunners.

The managers have an over-allotment option to purchase an additional C$50 million, or 2 million shares, of series A preferreds.

Proceeds will be used to partially fund capital projects, for other general corporate purposes and to reduce short-term debt. The company may invest funds that it does not immediately require in short-term marketable debt securities.

Calgary, Alta.-based TransAlta is a power generation and wholesale marketing company.

Also, Capital Power sold C$125 million of cumulative rate reset preferred shares to yield 4.6% per year.

The offering included 5 million shares of series 1 preferred stock (DBRS: Pfd-3//P-3/) at a price of C$25.00 per share.

TD Securities Inc. and RBC Capital Markets Corp. were the bookrunners.

The dividend rate will reset on Dec. 31, 2015 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 217 bps.

Capital Power may redeem the shares on Dec. 31, 2015 and on Dec. 31 of every fifth year thereafter.

Proceeds will be lent to affiliate Capital Power LP, which will use the funds to repay a portion of the outstanding balance under its credit facilities that were used to fund the acquisition of Island Generation and for general corporate purposes.

Capital Power is an Edmonton, Alta.-based power producer with operations in Canada and the United States.

Trinidad Drilling on tap

In upcoming deals, Canadian oil and gas drilling equipment provider Trinidad Drilling announced on Thursday it plans to sell $450 million of senior unsecured notes due January 2019 in a U.S.-dollar denominated offering.

Wells Fargo Securities is the left bookrunner for the Rule 144A and Regulation S for life notes.

RBC Capital Markets and TD Securities are the joint bookrunners.

HSBC and Scotia Capital are joint lead managers. Daiwa Securities and Comerica Securities are co-managers.

The notes are expected to price late the week of Dec. 6.

The proceeds from the sale will be used to redeem the C$354 million outstanding of 7.75% convertible unsecured subordinated debentures due July 2012 and to repay a portion of the debt outstanding from existing revolving credit facilities and term loans due in 2012.

The Calgary, Alta.-based company operates in the drilling, well servicing and barge drilling sectors in the oil and natural gas industry in Canada, the United States and Mexico.

OPTI trends up with market

A trader said OPTI Canada remained a busy credit, as the positive tone of the market helped the company's debt gain about half a point on the day.

"Everything is up to a certain extent," he said.

He pegged the 8¼% notes due 2014 at 71½ and the 7 7/8% notes due 2014 at 70¼ bid, 70½ offered.

OPTI Canada is a Calgary, Alta.-based oilsands producer.

Paul A. Harris and Stephanie N. Rotondo contributed to this review

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