Ontario, Alberta price; Ainsworth Lumber sells dollar notes; Canada Housing to launch deal

By Cristal Cody

Prospect News, Nov. 14 - Canadian provincial issuers tapped the domestic markets on Wednesday with C$1.25 billion in two deals sold early in the day, according to bond sources.

The Province of Ontario raised C$750 million in an add-on to its 2.85% bonds due June 2, 2023 that it first priced at the start of the month.

The Province of Alberta came with a C$500 million offering of 1.7% five-year notes.

In the U.S. high-yield market, Vancouver, B.C.-based Ainsworth Lumber Co. Ltd. priced $350 million of five-year secured notes late afternoon.

Coming up on Thursday, Canada Housing Trust plans to launch a reopening of its 10-year fixed-rate tranche and a new five-year floating-rate tranche of mortgage bonds, an informed source said.

"Usually, it's Tuesday for Wednesday pricing, but this time, it's Thursday for Friday," the source said.

The trust is expected to sell C$2 billion to C$2.5 billion of the 10-year bonds and C$1 billion of the floating-rate bonds, sources said.

Corporate bonds closed weaker on the day.

The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 109 bps.

The Markit CDX Series 18 North American high-yield index fell to 97.37 from 97.84.

Canadian government bonds ended modestly weaker on the longer end of the curve. Canada's 10-year note yield closed up 1 bp at 1.7%. The yield on the 30-year bond rose to 2.3% from 2.29%.

Ontario prices C$750 million

The Province of Ontario (Aa2/AA-/DBRS: AA) priced C$750 million in a reopening of its 2.85% bonds due June 2, 2023 at 100.171 to yield 2.831% on Wednesday, an informed source said.

The bonds priced at a spread of 100 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the lead manager.

The notes are non-callable.

The province first sold the issue on Nov. 1 in a C$500 million offering at 99.736 to yield 2.879%, or a spread of 97.5 bps over the Government of Canada benchmark. The total outstanding is C$1.25 billion.

Alberta sells new five-years

The Province of Alberta (Aaa/AAA/DBRS: AAA) sold C$500 million of 1.7% five-year notes at 99.605 to yield 1.782% on Wednesday, an informed bond source said.

The notes due Dec. 15, 2017 priced at a spread of 46 bps over the Government of Canada benchmark.

CIBC World Market Inc. was the bookrunner.

The province last tapped the Canadian debt markets on Sept. 17 with a C$600 million reopening of its 2.55% notes due Dec. 15, 2022 at 98.951 to yield 2.668%, or a spread of 72 bps over the Canadian government benchmark.

Ainsworth prices $350 million

Ainsworth Lumber priced a $350 million issue of five-year senior secured notes (B2/B/) at par to yield 7½% on Wednesday, according to an informed source.

The yield printed at the tight end of yield talk that was set in the 7 5/8% area.

Bank of America Merrill Lynch was the bookrunner.

Proceeds, along with proceeds from a rights offering, a standby purchase and cash on the balance sheet, will be used to repurchase and/or redeem the company's existing notes and term loan.

Ainsworth is a Vancouver, B.C.-based manufacturer of engineered wood products.

Canada Housing to launch

Canada Housing Trust (Aaa/AAA/DBRS: AAA) is expected to launch the offering of Canada Mortgage Bonds on Thursday and price on Friday, an informed bond source said.

The trust plans to sell C$2 billion to C$2.5 billion in a reopening of its 2.4% bonds due Dec. 15, 2022. The trust sold C$2.25 billion of the bonds at 56 bps over the Government of Canada benchmark on Aug. 15.

In the second tranche, Canada Housing Trust is expected to sell C$1 billion of floating-rate notes due March 15, 2018 talked to yield three-month CDOR plus 6 bps to 7 bps.

The trust is a unit of Canada Mortgage and Housing Corp., which provides financing, mortgage loan insurance, mortgage-backed securities and housing policy and programs.

Paul A. Harris contributed to this review

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