Transpower deal likely to repay coming maturity; Veresen holds update; Bombardier down

By Cristal Cody

Prospect News, March 6 - Transpower New Zealand Ltd. unit Transpower Finance Ltd. (A1/AA-/) is continuing its Canadian roadshow over the week, and a maple bond offering is anticipated, a bond source said on Tuesday.

The roadshow is marketed as a non-deal roadshow, but a coming maturity in May might change that, one source said.

"They did a maple issue before in 2007," the source said. "We anticipate they're here to refinance that maturity that's coming due this year."

Scotia Capital Inc. is hosting the non-deal roadshow, which started on Monday in Montreal and ends on Friday in Vancouver, B.C.

The New Zealand electricity supplier "is a very solid credit," a source said.

Also on Tuesday, Veresen Inc. started a two-day fixed-income investor update in Toronto.

CIBC World Markets Inc. and TD Securities Inc. are hosting the investor update, which continues in Montreal on Wednesday.

The company has made a couple of recent acquisitions, including closing Feb. 9 on a C$920 million acquisition of a gas gathering and processing complex.

"They did not go public with any intention to issue, but they will need funding for their acquisition and this is a roadshow to inform everyone about the acquisition," an informed source said.

In February, Veresen priced C$150 million of cumulative redeemable preferred shares. On Nov. 17, the Calgary, Alta. pipeline and energy company was in the bond market with a C$150 million offering of 4% senior medium-term notes due 2018, which priced at a spread of 230 bps over the Government of Canada benchmark.

Otherwise, the Canadian markets ended Tuesday much as they did on Monday - "very quiet," a source said. "Given we had two consecutive days of negative market tone, we need a couple more days of stability for anything to happen. If market tone doesn't rebound tomorrow, we don't expect to see new corporate issues for the balance of the week."

Supply outlook eyed

A change in tone could offer new supply on Thursday or Friday, the source said.

Primary activity in the upcoming week likely will be quiet due to spring break in many of the provinces, a source noted.

"That means a lot of people are going to be away, particularly on the investor and dealer side," the source said. "Might see a bit of slowdown in trade activity as well."

Canada Housing Trust (Aaa/AAA/DBRS: AAA) is expected to sell C$5 billion to C$6 billion of Canada Mortgage Bonds due June 15, 2017 in the week ahead.

The trust is a unit of Canada Mortgage and Housing Corp., which provides financing, mortgage loan insurance, mortgage-backed securities and housing policy and programs.

Corporate bonds traded wider on the day along with the weaker tone.

The Markit CDX Series 17 North American high-grade index eased 3 bps to a spread of 98 bps.

Toronto-Dominion Bank's covered bonds that were sold in the U.S. high-grade market the previous day traded mostly flat on Tuesday.

Bombardier's new 10-year notes that were also sold the previous day stayed lower in trading.

Provincials wider

Provincial bonds traded 1 bp to 2 bps wider, a source said.

"Provincials opened up wider. The tone is just negative right from the start," the source said.

Five-year provincial notes traded 1 bp wider; 10-year notes widened 2 bps; and long bonds ended 1.5 bps wider.

"Everything's off today," the source said.

Canadian government bonds were stronger, particularly on the shorter end of the curve, on the risk-off tone over euro zone debt concerns. The two-year note yield dropped 4 bps to 1.07%. Canada's 10-year note yield fell 2 bps to 1.93%.

TD Bank flat

Toronto-Dominion Bank's 1.5% five-year covered bonds that were sold in the U.S. market on Monday traded going out on Tuesday at 69.5 bps bid, a trader said.

The bonds were seen earlier in the day at 70 bps bid, 68 bps offered, another trader said.

The bank sold $3 billion of the new bonds (Aaa/AAA/) to yield mid-swaps plus 45 bps, or 70.6 bps over Treasuries.

The bank and financial services company is based in Toronto.

Bombardier weakens

Bombardier's 5¾% notes due 2022 fell in secondary trading to 99.25 bid, 99.5 offered on Tuesday, a trader said.

Bombardier sold $500 million of the 10-year notes at par in the U.S. high-yield market on Monday.

Valcourt, Quebec-based Bombardier is a designer, manufacturer, distributor and marketer of motorized recreational vehicles and powersports engines.

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