BMO, Bank Nederlandse, Enbridge tap bond, preferred markets; Golf Town roadshow starts

By Cristal Cody

Prospect News, July 9 - Bank of Montreal and NV Bank Nederlandse Gemeenten each brought five-year note offerings in the Canadian markets on Monday, while Enbridge Inc. raised nearly double its initial offering of preferred stock.

"Otherwise, it's a very quiet day," a bond source said.

Bank of Montreal sold C$1 billion of five-year deposit notes, following Bank of Nova Scotia's C$1 billion reopening of its 2.25% three-year deposit notes on Friday.

Dutch issuer Bank Nederlandse Gemeenten raised C$125 million of five-year medium-term notes in a Canadian dollar-denominated deal on Monday.

Also in the market, Enbridge sold C$450 million, upsized from C$250 million, of cumulative redeemable preference shares.

Canada's high-yield bond market opened Monday with the kickoff of a roadshow for a deal expected to price later in the week, informed sources said.

Golf Town Canada Inc. and Golfsmith International Holdings, Inc. started the three-day roadshow and held a national investor conference call for their offering of C$150 million of senior second-lien notes.

Bonds ended the day moderately better in trading.

The Markit CDX Series 18 North American investment-grade index firmed 2 basis points to a spread of 111 bps.

Government bonds traded higher in thin trading and light volume following weaker Chinese and U.S. economic data, sources said. Canada's 10-year note yield closed 3 bps lower at 1.66%. The 30-year bond yield dropped to 2.27% from 2.30%.

Bank of Montreal prices

Bank of Montreal priced C$1 billion of 2.39% five-year deposit notes at par on Monday, an informed bond source said.

The notes due July 12, 2017 (Aa2/A+/DBRS: AA) priced at a spread of 117 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. was the bookrunner.

The financial services company is based in Toronto and Montreal.

BNG sells C$125 million

NV Bank Nederlandse Gemeenten sold C$125 million of 2.375% five-year medium-term notes at 99.828 to yield 2.412% on Monday, a bond source said.

The notes due July 2, 2017 (Aaa/AAA/AAA) priced at a spread of mid-swaps plus 90 bps.

Rabobank International and TD Securities Inc. were the lead managers.

The bonds priced under the company's €90 billion debt issuance program announced in June.

Proceeds will be used for general corporate purposes.

BNG, based in the Hague, the Netherlands, provides financing for publicly owned organizations.

Enbridge upsizes, prices

Enbridge said it nearly doubled an initial offering on Monday and sold an upsized C$450 million of cumulative redeemable preference shares to yield a 4% annual dividend for the fixed-rate period to but excluding Dec. 1, 2018.

The company priced 18 million shares of the series N stock (Baa3/BBB/DBRS: Pfd-2) at C$25.00 per share.

Enbridge originally announced an offering of C$250 million, or 10 million shares, of the series.

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

The shares are redeemable by Enbridge at its option on Dec. 1, 2018 and on Dec. 1 of every fifth year thereafter.

The dividend rate will reset on Dec. 1, 2018 and every five years thereafter at a rate equal to the then five-year Government of Canada bond yield plus 2.65%.

Shareholders will have the right to convert the series N preferreds into series O cumulative redeemable preference shares on Dec. 1, 2018 and on Dec. 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 bill rate plus 2.65%.

Proceeds of the offering 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.

Golf Town, Golfsmith on road

Golf Town Canada and Golfsmith started their roadshow for an offering of C$150 million of senior second-lien notes (/B/DBRS: B) in New York on Monday, according to an informed bond source.

The roadshow will continue in Toronto on Tuesday and Wednesday with pricing expected to follow late in the week.

The deal includes 150,000 units with 70% to be issued by Golf Town and 30% to be issued by Golfsmith.

The notes are being offered on a private placement basis in Canada and under Rule 144A in the United States.

Scotia Capital, TD Securities and BMO Capital Markets are the bookrunners. Co-managers are HSBC Capital (Canada) Inc. and National Bank Financial Inc.

The issue is guaranteed by Golf Town Canada Holdings Inc., Golf Town USA Holdings Inc., the issuers, Golf Town USA Inc. and existing restricted subsidiaries and certain future restricted subsidiaries.

The notes are non-callable for two years. In 2014, the notes may be called at par plus ½ the coupon, in 2015 at par plus ¼ the coupon and 2016 and thereafter at par.

The notes have a 101% change-of-control put; an equity clawback for up to 35% in the first two years at par plus the coupon; and a Canadian call at the Canada Bond Yield plus 50 bps.

Proceeds will be used to repay debt, replace the existing Golfsmith ABL facility and return capital to shareholders.

Golf Town plans to acquire U.S. specialty golf retailer Golfsmith International for $6.10 a share.

Markham, Ont.-based Golf Town is owned by Omers Private Equity. Golfsmith is an Austin, Texas-based golf retailer.

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