IBM raises C$500 million; Ford Credit, Cash Store bonds firm, high-yield deals forecast

By Cristal Cody

Prospect News, Feb. 3 - International Business Machines Corp. priced C$500 million of five-year notes in a deal brought to market on Friday, according to bond sources.

Veresen Inc. also sold a C$150 million offering of preferred stock on Friday.

The deals wrapped a busy week of issuance in Canada with offerings from Wells Fargo Canada Corp., BMW Canada Inc. and BRP Finance ULC.

Investment-grade bonds ended the week stronger. The Markit CDX Series 17 North American investment-grade index closed Friday at a spread of 94 basis points.

Canada's high-yield market performed well, a trader said.

Ford Credit Canada Ltd.'s five-year notes sold on Wednesday had edged higher by the time trading wrapped up on Friday.

Cash Store Financial Services Inc.'s five-year notes also traded better.

High-yield primary issuance in January was strong with about C$1 billion in five deals and the momentum is expected to continue.

At least C$250 million more in high-yield deals are in the works, a source said.

Canadian government bonds traded lower on better U.S. jobs data. Canada's 10-year note yield rose to 2.01% from 1.94%. The 30-year bond yield closed up 6 bps to 2.61%.

Statistics Canada said in a report on Friday that domestic employment was unchanged in January. The unemployment rate rose 0.1% to 7.6%.

In the United States, the Labor Department said on Friday that 243,000 jobs were added in January, far higher than the 145,000 forecast.

IBM sells C$500 million

International Business Machines (Aa3/A+A+) priced C$500 million of 2.2% five-year notes at 99.943 to yield 2.212%, an informed source said.

The notes due Feb. 10, 2017 priced at a spread of 85.5 basis points over the Government of Canada benchmark.

Merrill Lynch Canada Inc. and RBC Capital Markets Corp. were the bookrunners.

Proceeds will be used for general corporate purposes.

IBM sold $2.5 billion of notes in a two-tranche offering in the U.S. market on Wednesday.

The technology products and services provider is based in Armonk, N.Y.

Veresen sells preferreds

In other market activity on Friday, Veresen sold C$150 million of cumulative redeemable preferred shares to yield 4.4% for the initial period to Sept. 30, 2017.

The company sold 6 million series A preferred shares (DBRS: Pfd-3) at C$25 per share.

The deal includes an over-allotment option of C$50 million, or 2 million shares.

Scotia Capital Inc., TD Securities Inc. and CIBC World Markets Inc. were the lead managers.

The shares are redeemable by Veresen at its option on Sept. 30, 2017 and on Sept. 30 of every following fifth year.

The dividend rate will reset on Sept. 30, 2017 and every five years at a rate equal to the five-year Government of Canada bond yield plus 2.92%.

An application has been made to list the preferreds on the Toronto Stock Exchange.

Proceeds will be used to reduce debt, partially fund capital expenditures and for other general corporate purposes.

The pipeline and energy company is based in Calgary, Alta.

Ford Credit Canada trades up

In secondary trading, Ford Credit Canada's 4.875% notes due Feb. 8, 2017 rose to 100.375, a trader said on Friday.

The company sold C$500 million of the notes (Ba1/BB+/DBRS: BB) at par on Wednesday.

Ford Credit Canada is the Canadian financing arm of Ford Motor Co.

Cash Store Financial better

Cash Store Financial's 11.5% notes due Jan. 31, 2017 (B3/B/) traded better at 96.50 bid on Friday, according to a trader.

Cash Store Financial sold C$132.5 million of the five-year senior secured notes at 94.608 on Jan. 24.

Edmonton, Alta.-based Cash Store Financial provides broker and short-term lending services.

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