RBC, AltaGas, Brookfield tap Canadian markets; Enbridge brings U.S.-dollar preferred deal

By Cristal Cody

Prospect News, April 10 - April appears to be off to a robust start with three new bond offerings on Tuesday in the Canadian markets.

Royal Bank of Canada raised C$1.5 billion of five-year deposit notes, Brookfield Office Properties Inc. sold an upsized C$150 million of six-year senior notes and AltaGas Ltd. priced C$200 million of eight-year medium-term notes on Tuesday.

In addition, Enbridge Inc. came with an offering of $200 million of U.S. dollar-denominated preferred stock for Canadian investors.

"The rationale was two-fold," Jonathan Gould, director of investor relations for Enbridge, said in an interview. "We've got significant projects in the U.S. that are going to be funded in the near term, so we looked to match funds in the right currency where appropriate. And secondly, we've done a significant amount of Canadian preferred dollar shares in the past year and this is just another way of tapping the preferred share market but touching a slightly differentiated investor base."

Enbridge has sold two offerings of preferred stock in the Canadian market this year, including C$500 million of 4% preferreds on Jan. 9 and C$300 million of preferred shares on March 20.

Despite the heavy issuance on Tuesday, market tone was considered poor overall on weaker Chinese economic data.

"It is a pretty crappy day up here in terms of equity markets," one bond source said.

The Markit CDX Series 18 North American investment-grade index eased 2 basis points to end at a spread of 104 bps.

Government bonds rose on the slowing global growth concerns. Canada's 10-year note yield dropped 8 bps to 1.99%. The 30-year bond yield fell 7 bps to 2.56%.

RBC sells C$1.5 billion

In Canada's bond market, Royal Bank of Canada (Aa1/AA-/DBRS: AA) priced C$1.5 billion of 2.58% five-year deposit notes at 99.986 to yield 2.583% on Tuesday, a bond source said.

The notes due April 13, 2017 priced at a spread of 107 bps over the Canadian government benchmark.

RBC Capital Markets Corp. was the lead manager.

Toronto-based Royal Bank of Canada offers full-service personal and business banking, brokerage and bank-owned mutual fund services.

AltaGas prices MTNs

Also pricing on Tuesday, AltaGas (/BBB/DBRS: BBB) raised C$200 million of 4.07% eight-year medium-term notes at 99.997 to yield 4.071%, a bond source said.

"It was way oversubscribed," a bond source said.

The notes due June 1, 2020 priced at a spread of 220 bps over the Canadian government benchmark.

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

The company last sold bonds on Oct. 12. AltaGas priced C$200 million of 4.55% senior medium-term notes due Jan. 17, 2019 at 99.994 to yield 4.552%, or a spread of 252 bps over the Canadian bond curve.

"AltaGas broke a little tighter," a bond source said.

The bonds traded about 2 bps tighter in afternoon secondary trading.

AltaGas is an energy company based in Calgary, Alta.

Brookfield upsizes

Brookfield Office Properties upsized from C$125 million and sold C$150 million of 4% senior notes due April 16, 2018 at par, according to bond sources.

"It was a mix of retail and institutional," one bond source said.

The notes (/BBB-/DBRS: BBB) priced at a spread of 236.8 bps over the Government of Canada benchmark.

RBC Capital Markets and Scotia Capital Inc. were the lead managers.

The proceeds will be used for general corporate purposes, including the repayment of debt.

Brookfield Office Properties last sold notes on Jan. 12 in Canada. The company priced C$200 million of senior notes due Jan. 17, 2017 (/BBB-/DBRS: BBB) at par to yield 4.3%, or 300 bps over the Government of Canada benchmark.

Toronto-based Brookfield is a Canadian real estate investment trust that owns, develops and manages office properties in the United States, Canada and Australia.

Enbridge sells preferred deal

Enbridge priced $200 million of the U.S. dollar-denominated cumulative redeemable preference shares in the Canadian market on Tuesday.

The company sold 8 million shares of the series J preferred stock (Baa3/BBB/DBRS: Pfd-2) at $25.00 per share.

The preferreds yield a 4% annual dividend for the initial period to June 1, 2017. The dividend rate will reset on June 1, 2017 and every five years thereafter at the then five-year U.S. government bond yield plus 305 bps.

Scotia Capital Inc. was the lead manager.

The shares are redeemable by Enbridge, at its option, on June 1, 2017 and on June 1 of every fifth year thereafter.

Proceeds will be used to partially fund capital projects, to reduce existing debt and for other general corporate purposes.

Enbridge is a Calgary, Alta.-based oil and gas distributor and transportation company.

© 2015 Prospect News.
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