Ontario, Reliance tap Canadian markets; Enbridge doubles offering; Paramount on roadshow

By Cristal Cody

Prospect News, Nov. 26 - The Province of Ontario led Canadian deal action on Monday with a C$750 million reopening of its notes due 2023, followed by Reliance LP's C$700 million offering of two tranches of senior secured notes, informed bond sources said.

Details from a couple offerings priced in Canada over the U.S. Thanksgiving holiday emerged on Monday.

Enbridge Income Fund sold C$200 million of two-year floating-rate senior medium-term notes, and AltaLink, LP raised C$275 million of 10-year medium-term notes.

In other issuance on Monday, Enbridge Inc. said that it doubled its initial offering of C$200 million to sell C$400 million of cumulative redeemable preference shares.

The week is expected to continue to feature "infrequent issuers," one source said. "There's a fairly good bid for those names."

Paramount Resources Ltd. started a three-day Canadian and U.S. roadshow in Toronto on Monday for an offering of C$250 million of seven-year senior notes (Caa1/B/) with pricing expected to following, according to informed sources.

"No guidance out yet," one source said.

A deal may be on the horizon from Winnipeg, Man.-based IGM Financial Inc., which filed a C$2 billion shelf prospectus for debt securities, first preferred shares and common shares with Canadian regulators on Friday.

The Markit CDX Series 18 North American investment-grade index ended at a spread of 101 basis points.

The Markit CDX Series 18 North American high-yield index closed at 99.42.

Government bonds traded stronger on Monday with yields down 1 bp on the shorter end of the bond curve and 3 bps on the longer end. The 10-year note yield fell to 1.76% from 1.79%. The 30-year bond yield dropped 3 bps to 2.34%.

Ontario sells C$750 million

The Province of Ontario (Aa2/AA-/DBRS: AA) raised C$750 million in a reopening of its non-callable 2.85% bonds due June 2, 2023 on Monday at 99.82 to yield 2.87%, according to an informed source.

The bonds priced at a spread of 101.5 bps over the Government of Canada benchmark.

RBC Capital Markets was the lead manager.

The province first priced 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$2.5 billion.

Reliance prices two tranches

Reliance sold C$700 million in two tranches of senior secured notes (/BBB/DBRS: BBB) in the private placement in Canada on Monday, an informed bond source said.

In the first tranche, company priced C$375 million of 4.574% notes due March 15, 2017 at par to yield 4.575%, or a spread of 325 bps over the Government of Canada benchmark. The notes are redeemable at 81 bps over the Government of Canada benchmark.

Reliance also sold C$325 million of 5.187% notes due March 15, 2019 at par to yield 5.188%, or a spread of 370 bps over the Canadian bond curve. The notes are redeemable at 92.5 bps over the Government of Canada benchmark.

CIBC World Markets Inc. and RBC Capital Markets were the bookrunners. Co-managers were Scotia Capital Inc., Desjardins Securities Inc. and Laurentian Bank Securities, Inc.

The offering had a minimum subscription of C$100 million. The company held a roadshow the previous week.

Proceeds will be used to repay existing debt.

The Canadian water heater rental and heating and air conditioning service company is a subsidiary of Reliance Intermediate Holdings LP.

Enbridge doubles offering

Enbridge said on Monday that it sold C$400 million of cumulative redeemable preference shares to yield a 4% dividend for the initial period up to but excluding June 1, 2019.

The company sold 16 million shares of the series R preferred stock (Baa3/BBB/DBRS: Pfd-2) at C$25.00 per share. The deal was upsized from C$200 million, or 8 million shares.

Scotia Capital Inc., RBC Capital Markets and TD Securities Inc. were the lead managers.

The series R preferred shares are redeemable by Enbridge on June 1, 2019 and on June 1 of every fifth year thereafter.

The dividend rate will reset on June 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 250 bps.

The holders will have the right to convert their shares into series S cumulative redeemable preference shares on June 1, 2019 and on June 1 of every fifth year thereafter and receive quarterly floating rate cumulative dividends at a rate equal to the sum of the then 90-day Government of Canada Treasury bill rate plus 250 bps.

The Calgary, Alta.-based oil and gas distributor and transportation company plans to use the proceeds to partially fund capital projects, reduce existing debt and for other general corporate purposes.

Enbridge Income taps market

In the offering from Enbridge Income Fund, the company sold C$200 million of two-year floating-rate senior medium-term notes, a source with the company said on Monday.

The series 8 notes due Nov. 28, 2014 (Baa2/DBRS: BBB) priced at par to yield 100 bps over the three-month Canadian Dealer Offered Rate.

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

Proceeds will be used to repay debt and for general corporate purposes.

Calgary, Alta.-based Enbridge Income Fund focuses on investments in energy infrastructure assets.

AltaLink sells C$275 million

AltaLink priced C$275 million of 2.978% 10-year medium-term notes at par in an offering, according to the company and bond sources.

The series 2012-2 notes due Nov. 28, 2022 (/A-/DBRS: A) priced at a spread of 115 bps over the Government of Canada benchmark.

RBC Dominion Securities Inc., Scotia Capital, BMO Nesbitt Burns Inc., National Bank Financial Inc., TD Securities and Casgrain & Co. Ltd. were the bookrunners.

Proceeds of the offering will be used primarily to repay outstanding commercial paper.

AltaLink last was in the Canadian debt market over the summer with a C$300 million offering of 3.99% 30-year medium-term notes that priced on June 27 at par to yield 166 bps over the Government of Canada benchmark.

Calgary, Alta.-based AltaLink is an electric power transmission company.

Paramount on roadshow

Paramount Resources started a three-day Canadian and U.S. roadshow in Toronto on Monday for an offering of C$250 million of seven-year senior notes (Caa1/B/), according to an informed source.

The roadshow continues in Toronto on Tuesday and will be held in Boston on Wednesday.

RBC Dominion Securities, Scotia Capital and BMO Nesbitt Burns are the bookrunners. Co-managers are AltaCorp. Capital Inc., HSBC Securities (Canada) Inc., TD Securities, Peters & Co. Ltd. and Stifel Nicolaus Canada Inc.

The offering will price under the company's C$500 million shelf prospectus that was filed on Nov. 8.

The Rule 144A notes will be privately placed in the U.S. high-yield market and will be offered in the Canadian provinces except Quebec.

The issue is guaranteed by the Calgary, Alta.-based oil and natural gas developer's restricted subsidiaries.

The notes have a 101% change-of-control put and a Canadian call at 100 bps over the Government of Canada benchmark.

The issue will be non-callable for three years. Redemption details in 2015, 2016 and 2017 have not been finalized. In 2018 and thereafter, the notes will be redeemed at par.

Proceeds will be used for the non-permanent repayment of debt under the credit facility, for capital expenditures including the construction and expansion of the company's natural gas processing facilities and drilling of additional wells and for general corporate purposes.

Paramount Resources last tapped the Canadian debt markets on Jan. 28, 2011. The company sold C$70 million in a reopening of its 8¼% senior notes due 2017 (Caa1/B+) at 103. The issue originally priced in a C$300 million offering on Nov. 30, 2010 at par.

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