Export Development Canada taps U.S. market; Taseko Mines sets talk; Trident, Catalyst flat

By Cristal Cody

Prospect News, April 11 - Export Development Canada sold $1 billion of three-year bonds on Monday, according to a term sheet filed with the Securities and Exchange Commission.

Coming up in new deals, Taseko Mines Ltd. talked a $200 million offering of eight-year senior notes (B3/B) with a 7.75% to 8% yield on Monday, according to an informed source.

Also ahead, the provincial deal calendar is expected to pick up, one bond source said.

"It should start to get more active in the days and weeks ahead. We're almost coming to a finish in the budget season," the source said.

The Province of Manitoba is expected to finalize its budget on Tuesday.

In trading, Export Development Canada's notes were not active late afternoon in the secondary markets, a trader said.

Trident Resources Corp.'s 8.25% senior notes due 2018 that the company sold on Friday were seen trading wrapped around the issue price, an informed source said.

Even Catalyst Paper Corp., which has been becoming more and more active recently, was on the quiet side and its bonds unchanged, according to market sources.

Canadian government bonds dropped, sending yields 3 basis points to 4 bps higher across the curve. The two-year note yield rose 4 bps to 1.94%. The 10-year note yield also rose 4 bps to 3.48%. The 30-year bond yield moved up 3 bps to 3.87%.

"We saw a little bit of weakness in the Canadian bond market, especially relative to the U.S. Nothing out of the ordinary, but there was some backup in yields ahead of the bank's decision," said Douglas Porter, BMO Capital Markets' deputy chief economist.

The Bank of Canada is not expected to hike the 1% overnight interest rate at its policy meeting on Tuesday.

"There is some possibly they will sound a little bit more hawkish tomorrow, possibly hinting at a rate hike if not at the next meeting, then the meeting beyond," he said.

The Bank of Canada next meets on May 31 and again on July 19.

Treasuries finished Monday flat to slightly weaker ahead of the government's auction of $66 billion of debt. The 10-year note yield was flat at 3.58%, and the 30-year bond yield rose 1 bp to 4.65%.

"We have been a little bit upside and downside of unchanged all day long," said Mary Ann Hurley, a fixed income trader for D.A. Davidson & Co.

The Treasury Department will start with the auction of $32 billion of three-year notes on Tuesday. The government also will sell $21 billion in a reopening of notes due 2021 on Wednesday and $13 billion in a reopening of bonds due 2041 on April 14.

Primary sees activity

Export Development Canada sold US$1 billion of three-year bonds on Monday, according to a term sheet filed with the SEC.

The 1.5% bonds (Aaa/AAA/AAA) are due May 15, 2014 and are priced at 99.838 to yield 1.554%. The spread came in at Treasuries plus 24.1 bps.

The bonds are not callable.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., RBC Capital Markets LLC and TD Securities (USA) LLC were the bookrunners for the offering.

Proceeds will be used for general corporate purposes.

Based in Ottawa, Export Development Canada offers loans, guarantees, insurance and other agreements necessary to encourage international trade so that Canadian exports may be financed on competitive terms with those in the international markets.

Taseko Mines sets talk

Taseko Mines talked its $200 million offering of eight-year senior notes (B3/B) with a 7.75% to 8% yield on Monday, according to an informed source.

The order books close at noon ET on Tuesday, and the deal is set to price thereafter.

Barclays Capital is the bookrunner for the public notes offering. BMO Nesbitt Burns and TD Securities are the co-managers.

The notes come with four years of call protection and feature standard high-yield covenants.

The Vancouver, B.C., mineral and metals exploration and production company plans to use the proceeds to fund the expansion of Gibraltar Mine and for general corporate purposes.

Trident flat

The 8.25% senior notes due April 13, 2018 that Trident Resources priced on Friday traded Monday at 99.75 bid, 100.25 offered, an informed source said.

The company sold C$175 million of the notes (/B/) at par on Friday.

Trident Resources is a Calgary, Alta.-based natural gas exploration company with operations in Alberta and British Columbia.

Catalyst ends unchanged

Catalyst Paper's debt saw "a little bit of action," according to a trader, though he noted that the bonds were right where they have been, "within a quarter-point."

He pegged the 7.375% notes due 2014 around 73.5.

Another trader also deemed the debt unchanged at 73 bid, 74 offered.

A third trader saw Catalyst Paper's 7.375% notes due 2014 holding around a 73-74 context, around their opening level and about unchanged from Friday. That was when the Richmond, B.C.-based paper company's bonds had risen between 2 and 3 points, to as high as the 74 level from 71 previously, though on no news.

The trader speculated that Catalyst "is not a really big issue" - there are perhaps $300 million of the bonds outstanding - and suggested that thin trading may have exaggerated the move. "It doesn't take much to move 'em up."

At another shop, Catalyst's 7.375s were called down one-quarter point at 73.5 bid.

As previously reported, trading in Catalyst has been ramping up recently - Monday's lackluster trading day excluded - though there hasn't been any fresh news. However, Gimme Credit LLC analyst Kim Noland put out a report on Friday in which she said that there was still restructuring risk.

"Catalyst just implemented some price increases on certain of its specialty grades," she wrote in the report. "Operating results are at a low ebb due to slack demand and an appreciating Canadian dollar, however, and it remains to be seen whether a nascent economic recovery can translate into significantly improved cash flow for the company."

Noland also remarked that she expected the Richmond, B.C.-based papermaker to break even for the year.

Paul Deckelman, Paul A. Harris, Sheri Kasprzak and Stephanie N. Rotondo contributed to this review

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