Manulife unit, Toronto Hydro sell 10-year debt; GreenField deal off table; Newalta gains

By Cristal Cody

Prospect News, Nov. 15 - Two Canadian high-grade issuers tapped the bond markets on Tuesday with the sale of 10-year debt, informed sources said.

Manufacturers Life Insurance Co. priced C$550 million of 10-year subordinated debentures, and Toronto Hydro Corp. raised C$300 million from the sale of 10-year senior debentures.

Meanwhile, GreenField Ethanol Inc.'s high-yield bond deal that had been on the primary calendar looks to be off the table, according to a source.

"Don't think it's going to happen now," the source said. "It's no longer being marketed."

The Ontario-based ethanol company finished a two-week roadshow for the offering of C$175 million of five-year senior second-lien notes (/B+/DBRS: B) on Nov. 2. Proceeds would have been used to repay debt, to terminate existing interest rate swap agreements and for general corporate purposes.

In Canada's secondary market, the new debentures from Manufacturers Life Insurance priced late in the day but traded tighter as the market closed, according to a source.

Corporate bonds traded overall weaker on the day. The Markit CDX Series 17 North American high-grade index eased 2 basis points to a spread of 132 bps.

In other trading, most of the handful of new Canadian high-yield bonds were unchanged on Tuesday.

"All trading about the same," a trader said.

The new debt from Ford Credit Canada Ltd. and Cara Operations Ltd. traded flat, while Newalta Corp.'s notes edged higher.

Canadian government bonds fell across the curve on positive equities and strong domestic manufacturing sales data. The 10-year note yield rose 4 bps to 2.12%. The 30-year bond yield ended higher at 2.75% from 2.71%.

Manufacturers Life prices

Pricing late in the day on Tuesday, Manufacturers Life Insurance sold C$550 million of 4.21% 10-year subordinated debentures (DBRS: A) at par, an informed bond source said.

The notes due Nov. 18, 2021 priced at a spread of 280 bps over the Canadian bond curve, or 283.4 bps over the Government of Canada benchmark.

The bonds priced in a fixed-to-floating structure that has a fixed rate for the first five years. If the notes are not called at par on Nov. 18, 2016, the issue will convert to a floating rate.

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

In the secondary market, the 10-year debentures traded tighter at 281 bps bid, 278 bps offered, a source said.

"They priced so late in the day, not sure how much trading actually happened," the source said.

Toronto-based Manufacturers Life Insurance is a unit of Manulife Financial Corp.

Toronto Hydro taps market

Toronto Hydro priced C$300 million of 3.54% 10-year senior debentures (DBRS: A) at 99.95 to yield 3.546% on Tuesday, a bond source said.

The debentures due Nov. 18, 2021 priced at a spared of 142.8 bps over the Government of Canada benchmark.

TD Securities was the lead manager.

Toronto Hydro is a Toronto-owned holding company that operates subsidiaries Toronto Hydro-Electric System Ltd., which distributes electricity, and Toronto Hydro Energy Services Inc., which provides street lighting and energy-efficient products and services.

Newalta better

In the secondary market, Newalta's 7¾% senior debentures due Nov. 14, 2019 rose to 101 bid on Tuesday, a trader said.

The company sold C$125 million of the series 2 debentures (B1/DBRS: BB) at par on Nov. 8

Newalta is a Calgary, Alta.-based industrial waste management and environmental services company.

Ford Credit Canada flat

Elsewhere in trading, Ford Credit Canada's 4.2% senior notes due Nov. 14, 2013 were unchanged at 100.25 bid, a trader said.

The notes priced on Nov. 8 at 99.949 in a C$450 million offering.

The company is a financing arm of the Ford Motor Co.

Cara paper inactive

Not much activity has been seen in Cara Operations' 9 1/8% debt subscription receipts due Dec. 1, 2015 since the issue priced a week ago, a trader said Tuesday.

The receipts were quoted flat at 99 bid, 100 offered.

Cara (/BB-/DBRS: B) sold C$76 million of the receipts at 99 to yield 7.42%.

The subscription receipts will roll into the company's existing 9 1/8% senior second-lien guaranteed notes due Dec. 1, 2015 after the company's acquisition of Prime Restaurants Inc. closes in January.

Vaughan, Ont.-based Cara is Canada's largest full-service restaurant operator with brands that include Swiss Chalet Rotisserie & Grill, Harvey's and Montana's Cookhouse.

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