Epcor Utilities sells C$300 million 30-years; bonds trade tighter; Ontario paper widens

By Cristal Cody

Prospect News, Feb. 23 - Epcor Utilities Inc. tapped the Canadian bond markets on Thursday in an upsized C$300 million 30-year offering that had 57 buyers on board.

"The books were around C$1.2 billion, so lots of demand; hence, they were able to upsize and price at the tight end of guidance," an informed bond source said.

The week has seen steady bond issuance, and corporate primary activity on Friday is possible, according to sources.

"It's kind of up in the air, depending on tone," one source said.

Epcor's bonds rallied in the secondary market, trading 4 basis points tighter, a source said.

The Markit CDX Series 17 North American high-grade index firmed 1 bp to a spread of 97 bps on Thursday.

The Province of Ontario's C$1 billion reopening of its 1.9% five-year bonds on Wednesday did not trade as well on Thursday, a source said.

"It was a little slow to sell," the source said. "The Street was looking for a 10-year or 30-year deal, but the province opted for a five-year term. The Street was left a little long, and the five-year spread has widened."

Government bonds were mostly flat on Thursday following a rally on Wednesday. Canada's 10-year note yield fell 1 bp to 2.05%. The 30-year bond yield was unchanged at 2.64%.

Epcor sells C$300 million

Epcor Utilities (/BBB+/DBRS: A) raised an upsized C$300 million of 4.55% 30-year senior debentures at 99.756 to yield 4.565% on Thursday, a bond source said.

The debentures due Feb. 28, 2042 priced at a spread of 190 bps over the Canadian government benchmark, tighter than talk of 195 bps.

The deal was upsized from C$200 million.

BMO Capital Markets Corp. and RBC Capital Markets Corp. were the bookrunners.

The bonds rallied in the secondary market and traded tighter at 186 bps bid, 183 bps offered going out.

Epcor is an Edmonton, Alta.-based utility company.

Ontario widens

The Province of Ontario's 1.9% bonds due 2017 traded wider at 57 bps bid on Thursday, a bond source said.

The province (Aa1/AA-/DBRS: AA) sold C$1 billion in a reopening of the 1.9% five-year bonds on Wednesday at a spread of 55.5 bps over the Government of Canada benchmark.

The province first sold the issue on Jan. 17 in a C$1.25 billion offering at 99.744 to yield 1.948%, or a spread of 58.5 bps over the government benchmark.

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