BMO, VW Credit Canada, Holcim tap markets; tone helps deals; week's pipeline 'up in air'

By Cristal Cody

Prospect News, Oct. 2 - Canadian issuers took to the markets on Tuesday with new deals concentrated in the shorter end of maturities from Bank of Montreal, VW Credit Canada Inc. and Holcim Finance (Canada) Inc.

"It was not stupid aggressive, but it's been awhile since we had much, one small issue last week," a bond source said of the session. "There [are] not massive amounts of cash, but it's pretty solid."

BMO's sale of C$1.5 billion of three-year deposit notes was "well-received," another source said.

The deals from VW Credit Canada and Holcim Finance (Canada) also saw good demand, sources said.

VW Credit Canada raised C$400 million of four-year senior notes.

Holcim Finance (Canada) sold an upsized C$300 million of six-year senior notes in a private placement following a roadshow in Canada in early September.

"It saw a lot of demand and priced at the tight end of guidance," a syndicate source said. "The market continues to be supportive of new issues. We have not seen a lot of new issues recently, so deals have [gone] really well."

Looking ahead, primary activity for the week remains "kind of up in the air," according to one bond source. "It's a short week and non-farm payroll on Friday."

The Canadian markets will close early on Friday and close on Monday for a Thanksgiving Day holiday.

Canadian and U.S. monthly job reports will be released on Friday.

Provincial deal action has been heavier the past couple of weeks, which may rule out most provinces for the rest of the week, a source said.

"It's tone-dependent," the source said. "We may see some but we're not expecting a ton."

The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 98 bps on Tuesday.

The Markit CDX Series 18 North American high-yield index dropped to 99.91 from 99.94.

Government bonds were mostly flat to lower on the day. Canada's 10-year note yield rose 1 bp to 1.72%. The 30-year bond yield closed unchanged at 2.32%.

BMO sells C$1.5 billion

Bank of Montreal (Aa2/A+/DBRS: AA) priced C$1.5 billion of 1.89% three-year deposit notes at 99.997 to yield 1.891% on Tuesday, an informed bond source said.

The notes due Oct. 5, 2015 priced at a spread of 74.1 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. was the bookrunner.

The financial services company is based in Toronto and Montreal.

VW Credit Canada prices

Also in the primary market, VW Credit Canada (A3//DBRS: A) raised C$400 million in an offering of 2.2% four-year senior notes priced at 99.897 to yield 2.227%, according to a bond source.

The notes came at a spread of 98.7 bps over the Government of Canada benchmark.

TD Securities Inc. and RBC Capital Market LLC were the bookrunners.

VW Credit Canada last tapped the Canadian markets on May 24 with C$450 million offering in two tranches of senior notes due 2015 and 2017.

The financial services provider for Volkswagen Group Canada dealerships is based in Quebec.

Holcim tighter than guidance

Holcim Finance (Canada) (Baa2/BBB/) sold an upsized C$300 million of 3.65% senior fixed-rate notes at 99.936 to yield 3.633% in a private placement on Tuesday, according to an informed bond source.

The notes due April 10, 2018 priced at a spread of 233 bps over the Government of Canada benchmark, on the tight side of guidance of 235 bps. The deal was upsized from C$250 million.

The notes are redeemable at the Canada bond yield plus 58 bps.

CIBC World Markets Inc. and HSBC Capital (Canada) Inc. were the lead managers. RBC Capital Markets LLC and Scotia Capital Inc. were co-managers.

The company is the Canadian financing arm of Swiss cement manufacturer Holcim Ltd.

© 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.