Manitoba continues deal flow; Enbridge delays $550 million sale; Canadian Pacific firms

By Cristal Cody

Prospect News, Jan. 11 - Deal activity continued on Wednesday with an offering of C$300 million of five-year notes from the Province of Manitoba, following six corporate and provincial bond sales the previous day.

"The markets are in pretty good shape," a provincial bond source said on Wednesday. "This is one of a pipeline of supply. So far, the market has done well receiving the deals this week."

Primary activity is expected to stay steady.

"It's only Wednesday; there's no reason not to think we could see another issuer this week," a bond source said.

Canadian oil transporter Enbridge Inc. postponed its $550 million offering in the U.S. high-grade market on Wednesday after a reported natural gas leak in one of its pipelines, market sources said.

Bonds traded better over the day. The Markit CDX Series 17 North American investment-grade index ended 2 basis points tighter at a spread of 116 bps.

Canadian Pacific Railway Co.'s bonds tightened further over the week, a bond source said on Wednesday.

The Province of Manitoba's new deal late afternoon traded "tighter at 49" basis points, a source said.

Canadian government bonds rallied on Wednesday in line with U.S. Treasuries on successful bond auctions in both countries. Canada's 10-year note yield fell to 1.93% from 1.97%. The 30-year bond yield dropped 4 bps to 2.5%.

Manitoba sells C$300 million

The Province of Manitoba (Aa1/AA//DBRS: A) priced C$300 million of 1.85% notes due June 1, 2017 at 99.879 to yield 1.874% on Wednesday, a bond source said.

The notes came at a spread of 50 bps over the Government of Canada benchmark.

RBC Capital Markets Corp. was the lead manager.

Settlement is on Jan. 18.

Enbridge postpones deal

Enbridge postponed its $550 million offering of notes due 2021 (Baa1/A-) on Wednesday after a reported natural gas leak in one of its pipelines, market sources said.

A small natural gas leak was reported in the company's Stingray Pipeline off the coast of Louisiana in the Gulf of Mexico. This happened after the deal was announced and a conference call took place with the underwriters to determine whether to go forward with the sale, an informed source said.

The offering has been postponed indefinitely, he added.

The debt was being talked in the 150 bps area.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the bookrunners.

Proceeds would be used to repay short-term debt connected with the company's acquisition of a 50% interest in Seawawy Crude Pipeline System, for capital expenditures and for general corporate purposes.

The transporter of crude oil and liquids is based in Calgary, Alta.

Canadian Pacific narrows

Canadian Pacific Railway's 4.5% notes due 2021 firmed to 236 bps on Wednesday in the U.S. market, according to a bond source.

The bonds traded a week ago at 250 bps bid.

The issue (Baa3/BBB-/) priced on Nov. 28 at a spread of Treasuries plus 275 bps.

The railroad operator is based in Calgary, Alta.

Andrea Heisinger contributed to this review

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