Canadian Western Bank sells deposit notes; Western Energy Services on tap; Connacher up

By Cristal Cody

Prospect News, Jan. 13 - Canadian Western Bank kept the deal activity in Canada going on Friday with an upsized offering of C$250 million of five-year deposit notes, sources said.

"We started out with a flurry in the morning but it was quite quiet this afternoon," a source said.

The deal caps off a busy start to Canadian issuance in 2012 with deals over the week from Brookfield Office Properties Inc., Canadian Imperial Bank of Commerce and Hydro One Inc.

A high-yield deal is also in the works from Western Energy Services Corp., which started a roadshow on Friday, a source said.

Canada's high-yield bond market ended the week better with yields down about 15 basis points, though volumes are not at pre-holiday levels, a trader said.

Connacher Oil & Gas Ltd.'s bonds traded up 8 points on the week on news its chief executive officer left the company following the dismissal of three executives, a source said. The market anticipates the company will be sold, the source said.

Government bonds rallied Friday on a flight into safer haven debt after reports that Standard & Poor's would downgrade France and Austria.

Canada's 10-year note yield fell 3 bps to 1.92%. The 30-year bond yield dropped 3 bps to 2.5%.

"We've got yields from the belly of the curve out 4 or 5 basis points, but it's only a basis point or so less than what we're seeing in the U.S.," a bond source said.

The credit rating downgrades likely would have helped the rally further if yields were higher.

"If this would've happened a couple weeks back, you might have expected more out of both the bond markets in Canada and the U.S., but the market's already resisted a lot of the earlier risk-on tone and we're already at absolutely low levels," the source said.

In the week ahead, the Bank of Canada will release its policy rate report. No changes to the key rate are expected.

The U.S. markets will be closed on Monday for Martin Luther King Jr. Day, and the holiday likely will have a "dampening influence" on the Canadian bond markets, a source said.

Canadian Western Bank prices

In new issuance on Friday, Canadian Western Bank (DBRS: A) priced C$250 million of 3.049% deposit notes due Jan. 18, 2017 at par, a bond source said.

The notes priced at a spread of 175 bps over the Canadian bond curve.

The deal was upsized from C$150 million.

National Bank Financial and RBC Capital Markets Corp. were the managers.

The Edmonton, Alta.-based bank provides business and personal banking services.

Western Energy plans deal

A high-yield offering is in the pipeline from Western Energy Services, which started a roadshow on Friday in Vancouver, B.C., for C$75 million to C$125 million of bonds, according to a source.

The roadshow continues Monday and Tuesday in Toronto.

RBC Capital Markets Corp., ATB Investment Management Inc. and AltaCorp Capital Inc. are the bookrunners.

Proceeds will be used to reduce drawings on the company's bank facility and to fund growth.

Additional deal details were not yet available.

Western Energy is a Calgary, Alta.-based oilfield drilling company.

Connacher falls

In the secondary market, Connacher's 8¾% senior notes due 2018 traded at 96.5 bid on Friday, up 8 points on the week, a trader said.

The notes (Caa2/BB-/) were quoted a week ago at 88.5 bid.

The issue priced on May 20, 2011 at par.

On Thursday, the company announced CEO Richard Gusella's exit, a week after three top executives were dismissed.

In December, Connacher rejected an unsolicited takeover offer.

The integrated oil company is based in Calgary, Alta.

© 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.