Cominar REIT, Intact Financial, Hydro-Quebec, Export Development Canada tap bond markets

By Cristal Cody

Prospect News, June 12 - First-time and occasional Canadian issuers tapped domestic and U.S. bond markets on Tuesday, informed bond sources said.

Cominar Real Estate Investment Trust sold C$125 million of five-year debentures in its first Canadian bullet bond transaction, one source said.

"The deal was broadly distributed with participation from 25 investors and unprotected orders received fills in the area of 30% to 40%," the bond source said.

Intact Financial Corp., which hasn't been in the Canadian debt capital markets since August, priced an upsized C$200 million of 30-year medium-term notes late afternoon.

Across the border, Hydro-Quebec and Export Development Canada each sold $1 billion in U.S.-dollar denominated deals on Tuesday.

Hydro-Quebec priced a $1 billion of five-year global notes, and Export Development Canada sold $1 billion of three-year notes.

Coming up on Wednesday, Canada Housing Trust (Aaa/AAA/DBRS: AAA) is expected to reopen its 2.05% Canada Mortgage Bonds due June 15, 2017 to sell C$5 billion to C$5.5 billion in the domestic market. The trust priced C$5 billion of the series 46 five-year bonds on March 15 at a spread of 39 basis points over the Government of Canada benchmark.

Corporate bonds firmed after Monday's weakness. The Markit CDX Series 18 North American investment-grade index tightened 2 bps to a spread of 123 bps.

Government bonds widened along with U.S. Treasuries. Canada's 10-year note yield closed up 5 bps to 1.81%. The 30-year bond yield rose to 2.38% from 2.34%.

Cominar REIT prices C$125 million

In a widely expected deal, Cominar Real Estate Investment Trust (DBRS: BBB) sold C$125 million of 4.274% five-year debentures at par on Tuesday in its first Canadian bullet bond transaction, a bond source said on Tuesday.

The series 1 debentures due June 15, 2017 priced on top of guidance at a spread of 295 bps over the Government of Canada benchmark.

About C$25 million of the deal was carved out for retail.

The debentures are redeemable at the Canada Bond Yield plus 74 bps.

BMO Capital Markets Corp. and National Bank Financial Inc. were the lead managers.

Quebec City-based Cominar REIT holds office, retail and industrial properties in Quebec and Ontario.

Intact sells 30-year notes

Also in the market, Intact Financial (Baa1//DBRS: A) priced an upsized C$200 million of 5.16% 30-year medium-term notes at 99.909 to yield 5.166%, an informed bond source said.

The notes due June 16, 2042 priced on top of guidance at a spread of 278 bps plus the Canadian government benchmark.

The deal was upsized from C$150 million.

CIBC World Markets Inc., RBC Dominion Securities Inc. and TD Securities Inc. were bookrunners.

The notes are redeemable at the Canada Bond Yield plus 69.5 bps.

Proceeds will be used to reduce the company's current term loan debt under its existing credit facility and to fund a portion of the purchase price for its acquisition of all of the outstanding shares of Jevco Insurance Co. from Westaim Corp. If the acquisition is not completed, the proceeds will be used to repay the term loan debt and for general corporate purposes.

The company last tapped the Canadian debt capital markets in August with a C$300 million offering of 4.7% notes due Aug. 18, 2021 priced at 220 bps plus the Government of Canada benchmark.

Toronto-based Intact Financial is Canada's largest provider of property and casualty insurance.

Hydro-Quebec raises $1 billion

Hydro-Quebec (Aa2/A+/DBRS: A) priced a $1 billion U.S.-dollar denominated benchmark offering of 1.375% five-year global notes at 99.884 to yield 1.399% on Tuesday, a bond source said.

The notes due June 19, 2017 priced at a spread of 35 bps plus mid-swaps, or 64.65 bps plus Treasuries. The notes were talked at mid-swaps plus low to mid 30 bps.

Bank of America Merrill Lynch, CIBC World Markets Inc., HSBC Securities and RBC Capital Markets LLC were joint lead managers.

Proceeds will be used for general corporate purposes.

Hydro-Quebec is a Quebec government-owned electric power generator and distributor.

Export Development sells $1 billion

Export Development Canada sold $1 billion of 0.5% three-year notes on Tuesday at a spread of mid-swaps minus 18 bps, or Treasuries plus 14.15 bps, according to a source away from the trade and an FWP filing with the Securities and Exchange Commission.

The deal had been announced on Monday.

The notes (Aaa/AAA/AAA) were priced at 99.949 to yield 0.516%. There is no call option.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and TD Securities (USA) LLC were bookrunners.

Proceeds are being used for general corporate purposes.

The government-backed agency for exporters is based in Ottawa.

Andrea Heisinger contributed to this report

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