National Grid upsizes; EnerCare brings deal; market tone soft; Bombardier delays sale

By Cristal Cody

Prospect News, Nov. 15 - National Grid plc found good reception to its C$400 million offering of 2.9% seven-year maple bonds that priced at par on Thursday, despite a weaker tone that prompted Bombardier Inc. to delay its U.S. dollar-denominated $1 billion offering of senior notes, according to bond sources.

"It went very well," one source said of National Grid's deal. "It's a regulated utility, so that type of issuer we thought there would be good demand for and there was. It's the kind of space where investors feel comfortable even when the markets might be a little soft."

Also in the market on Thursday, EnerCare Inc. launched an offering for C$250 million of five-year senior notes late in the day.

The Canadian markets overall were soft along with U.S. bond markets.

"We're widening just with weaker equity markets," a Canadian bond source said.

Bombardier, following its downgrade by Standard & Poor's the previous day, postponed its U.S. dollar-denominated $1 billion offering of senior notes (Baa2/BB/BB) that was expected to price on Thursday.

"We pulled the bond issue," Isabelle Rondeau, director of communications for Bombardier, said in an interview. "The reason why is we were being opportunistic and the market conditions were not satisfactory."

The Province of Ontario tapped the U.S. investment-grade market on Thursday with a $250 million sale of five-year floating-rate medium-term notes.

Corporate bonds closed softer. The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 111 bps.

The Markit CDX Series 18 North American high-yield index fell to 97.00 from 97.37.

National Grid's new maple bonds opened in the secondary market 1 bp to 2 bps tighter, a source said.

Coming up on Friday, Thompson Creek Metals Co. Inc. is expected to tap the U.S. high-grade market with a $350 million offering of senior secured first-priority notes due 2018. The company has restructured the deal, according to an informed source.

Canada Housing Trust likely will dominate domestic deal action on Friday, sources said, with an add-on to its 10-year fixed-rate mortgage bonds and a new five-year floating-rate tranche of mortgage bonds.

"It's a large deal," one source said.

The trust plans to sell C$2 billion to C$2.5 billion of 2.4% bonds due Dec. 15, 2022 and C$1 billion of floating-rate notes due March 15, 2018, which were talked to yield three-month CDOR plus 6 bps to 7 bps.

The trust first sold C$2.25 billion of the bonds due 2022 at 56 bps over the Government of Canada benchmark on Aug. 15.

Government bonds traded flat to weaker on better economic data. Canada's 10-year note yield rose 2 bps to 1.72%. The 30-year bond yield closed 1 bp higher at 2.31%.

Canadian manufacturing sales rose 0.4% in September from the previous month, Statistics Canada said in a report.

National Grid upsizes

National Grid sold an upsized C$400 million of 2.9% seven-year maple bonds at par on Thursday, an informed bond source said.

The notes due Nov. 26, 2019 priced at a spread of 142 bps over the Canadian bond curve.

The deal was upsized from C$300 million.

TD Securities Inc. and RBC Capital Markets LLC were the lead managers.

The company tapped the Canadian debt markets for the first time in five years on Sept. 11 with a C$750 million five-year bond offering from subsidiary National Grid Electricity Transmission plc. The 2.73% notes due Sept. 20, 2017 (A3/A-/A) priced at par to yield a spread of 132 bps over the Government of Canada benchmark.

London-based National Grid operates electric and gas utilities in the United Kingdom and the United States.

EnerCare taps market

EnerCare launched an offering of C$250 million of five-year senior notes on guidance in the 298 bps area late Thursday afternoon, an informed source said.

The deal was launched after 3 p.m. ET and was expected to price after the markets closed on Thursday. Final terms were not available by press time.

TD Securities and National Bank Financial Inc. were the lead managers.

EnerCare is a Toronto-based energy conservation products and services provider.

Ontario sells floaters

The Province of Ontario priced $250 million of five-year floating-rate medium-term notes on Thursday at par to yield Libor plus 25 bps, according to an FWP filing with the Securities and Exchange Commission.

The notes (Aa2/AA-/) are non-callable.

Bookrunners were HSBC Securities (USA) Inc. and Morgan Stanley & Co. International plc.

Bombardier delays deal

Bombardier postponed its $1 billion offering of eight- and 10-year senior notes (Baa2/BB/BB) on Thursday.

Bombardier's credit rating was cut on Wednesday by S&P to BB from BB+ on lower-than-expected cash generation in 2012.

The company could not comment on how long the Rule 144A-for-life deal would be delayed.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch, BNP Paribas Securities Corp., Citigroup, Credit Agricole Securities (USA) LLC, J.P. Morgan Securities LLC, NBCF and RBC Capital Markets are the managers.

Proceeds from the deal would be used for general corporate purposes.

The aircraft and rail transportation manufacturer is based in Montreal.

Thompson Creek restructures

Thompson Creek Metals has restructured its $350 million offering of senior secured first-priority notes (B1/B), according to an informed source.

The maturity of the notes is decreased to five years from 5.25 years. Call protection is increased to three years from 2.25 years, and the first call premium is decreased to par plus 50% of the coupon from 75% of the coupon. In addition the 35% equity clawback coverage is extended to three years from 2.25 years.

The notes are talked to yield 9¾% to 10% with about 1 point of original issue discount.

Books close at 10 a.m. ET on Friday, and the deal is set to price thereafter.

Deutsche Bank Securities has the books for the deal, which is registered with the SEC.

RBC Capital Markets is the senior co-manager.

SG CIB, Standard Chartered Bank and UBS Investment Bank are the co-managers.

The diversified North American mining company plans to use the proceeds to replace and terminate its existing revolver, to fully fund the remainder of the capital expenditures at the Mt. Milligan copper and gold mine and for general corporate purpose.

Thompson Creek Metals is based in Vancouver, B.C., and Littleton, Colo.

Andrea Heisinger and Paul A. Harris contributed to this review

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