Cash Store prices notes; GE Capital Canada spurs trading; John Deere Credit, RioCan firm

By Cristal Cody

Prospect News, Jan. 24 - Cash Store Financial Services Inc. came with an upsized offering of C$132.5 million of high-yield bonds, and Canadian bonds traded stronger over the day on Tuesday, spurred by a C$950 million deal from GE Capital Canada Funding Co.

Cash Store Financial's bond sale was expected to price on Monday but was delayed until updated covenant disclosure documents were released and priced late afternoon on Tuesday.

Early Tuesday, the company said in a statement that the board of directors had recently received a letter from a short seller. The letter alleged that the company was in violation of payday loan regulations in the Province of Ontario and that as a result, its existing public reports were inaccurate.

"After reviewing the allegations, the company believes that it is in compliance with applicable regulations in the Province of Ontario in all material respects," Cash Store Financial said in the statement. "The company suspects that the letter is the commencement of an opportunistic attack on the company by a short seller, designed to disrupt the company's previously announced private offering of senior secured notes."

In Canada's investment-grade market, GE Capital Canada Funding's sale helped trading over the day, a source said.

"The market rallied yesterday and things are definitely tighter again today in Canada," the bond source said. "The GE trade was sort of a wakeup call for everybody. It had over 70 buyers, which we haven't seen that in a long time. Everybody came in today deciding they needed to buy more product, so they're doing a bunch of buying in the secondary market."

GE Capital Canada Funding's two tranches traded tighter in the secondary market along with other bonds on Tuesday, sources said.

GE Capital's notes due 2022 saw a "21-basis point rally" on the day, a source said.

In other trading, John Deere Credit Inc.'s new 1.85% two-year senior medium-term notes sold on Monday traded 3 bps tighter, a source said.

RioCan Real Estate Investment Trust's 3.8% five-year senior debentures are trading 17 bps tighter since the issue priced the previous week.

The Markit CDX Series 17 North American investment-grade index eased 1 bp to a spread of 104 bps.

Canadian government bonds traded lower on Tuesday. The 10-year note yield rose 1 bp to 2.08%. The 30-year bond yield edged up 1 bp to 2.66%.

Cash Store Financial upsizes

Cash Store Financial Services' deal included an upsized C$132.5 million of 11½% five-year senior secured notes priced at 94.608 to yield 13%, according to a bond source.

The deal was upsized from C$125 million.

The notes due Jan. 31, 2017 (B3/B/) were talked to price with an 11½% to 12% coupon to yield 12¾% to 13%.

Imperial Capital and Canaccord Genuity Corp. were the bookrunners.

The deal was distributed in Canada on a private placement basis and under Rule 144A and Regulation S.

The issue has a make-whole call at 50 bps over the government benchmark before July 31, 2014.

The notes may be redeemed in whole or in part on or after July 31, 2014 at 103.042; on or after Jan. 31, 2015 at 102.091; on or after July 31, 2015 at 101.127; on or after Jan. 31, 2016 at 100.194 and on or after July 31, 2016 at par.

The notes have 2.5 years of call protection and feature a 35% 2.5-year equity clawback and a 101% poison put.

Proceeds will be used to purchase loans and receivable assets from the company's third-party lenders and for general corporate purposes.

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

GE Capital Canada tightens

In the C$950 million sale from GE Capital Canada Funding (Aa2/AA+/), three-year floating-rate notes and 10-year fixed rate notes were sold to more than 70 buyers, an informed source said on Tuesday.

GE Capital Funding priced C$200 million of three-year floating-rate notes at par to yield a spread of 130 bps over the three-month Canadian Dealer Offered Rate.

In the second tranche, GE Capital Canada Funding sold C$750 million 4.6% 10-year bonds at 99.976 to yield 4.603%, or a spread of 251.8 bps over the Government of Canada benchmark.

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

In the secondary market on Tuesday, the floating-rate notes traded 5 bps tighter at 125 bps bid, a source said.

The notes due 2022 came in to 230 bps bid.

GE Capital Funding Canada is the Canadian financing arm for General Electric Co.

PetroBakken sets talk

PetroBakken Energy Ltd. talked its $750 million offering of eight-year senior notes (Caa1/CCC+) with a yield in the 8¾% area on Tuesday, according to informed sources.

The books close at 11 a.m. ET on Wednesday, except for Toronto accounts.

Joint bookrunner Bank of America Merrill Lynch will manage stabilization. Credit Suisse Securities (USA) LLC, which is also a joint bookrunner, will bill and deliver. RBC Capital Markets is also a joint bookrunner.

CIBC World Markets, TD Securities (USA) LLC and Scotia Capital (USA) Inc. are the joint lead managers. HSBC Securities (USA) Inc., Desjardins Capital Markets, Mitsubishi UFJ Securities International plc, SMBC Capital Markets Inc. and SG CIB are the co-managers.

The Rule 144A and Regulation S for life notes come with four years of call protection.

The Calgary, Alta.-based light oil exploration and production company plans to use the proceeds to fund the concurrent partial tender of up to $450 million of its convertible notes maturing in 2016 and to repay a portion of its revolver.

John Deere Credit firms

In Canada's secondary market, John Deere Credit's 1.85% senior medium-term notes due Jan. 24, 2014 traded in 3 bps to 77 bps bid on Tuesday, according to a bond source.

The company sold C$200 million of the notes at a spread of 80 bps over the Canadian bond curve on Monday.

The equipment financing and leasing company is based in Burlington, Ont.

RioCan REIT narrows

RioCan Real Estate Investment Trust's 3.8% senior debentures due March 1, 2017 (DBRS: BBB) tightened 17 bps to 222 bps bid, a source said Tuesday.

The trust sold C$150 million of the five-year debentures at a spread of 239 bps over the Government of Canada benchmark.

Toronto-based RioCan REIT is Canada's largest real estate investment trust.

Paul A. Harris contributed to this review

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