Garda World brings week's second high-yield deal; junk market better; Cash Store rises

By Cristal Cody

Prospect News, Jan. 27 - The Canadian bond markets ended the week with a high-yield offering, the second of the week, following active issuance in the provincial and corporate markets.

Garda World Security Corp. sold C$50 million in a reopening of its 9¾% five-year senior notes on Friday.

Another Canadian high-yield offering priced on Tuesday from Cash Store Financial Services Inc., which sold C$132.5 million of 11½% five-year senior secured notes.

"We've had such a busy week," a source said.

On Thursday, about C$1.8 billion in provincial deals were priced from the provinces of Ontario, Saskatchewan and New Brunswick and from Financement-Quebec, a Quebec provincial agency.

National Bank of Canada came on Wednesday with C$1 billion of 2% three-year deposit notes.

On Monday, GE Capital Canada Funding Co. sold C$950 million in two tranches and John Deere Credit Inc. sold C$200 million in 1.85% two-year senior medium-term notes.

In the secondary market, Garda World's notes traded up 1 point late in the session.

Cash Store Financial's bonds have "done really well" over the week and traded up more than 2 points, a trader said.

"High-yield is up probably 2 points this week," the trader said.

Corporate high-grade bonds also were stronger.

The Markit CDX Series 17 North American investment-grade index ended 1 basis point tighter at a spread of 100 bps.

Government bonds stayed higher on Friday. Canada's 10-year note yield fell to 1.98% from 2.03%. The 30-year bond yield dropped 4 bps to 2.6%.

"The main focus of the market right now is the Greek debt restructuring and we're in corporate earnings season," a bond source said. "It's quiet on the bond side; all the attention is focused on equities. Stocks are down a bit today on the weaker U.S. GDP number, and there's some profit-taking."

Garda World reopens five-year

Garda World Security sold C$50 million in a reopening of its 9¾% senior notes due March 15, 2017 (B2/B/) at 102 to yield 9.15% on Friday, and the notes traded up 1 point on the day, sources said.

The notes came at a spread of 789 bps over the Government of Canada benchmark.

TD Securities Inc. and UBS Securities LLC were joint lead bookrunnners.

"The net proceeds received from the issuance of the notes will be used to repay our bank debt," Garda chief financial officer Patrick Prince said in a news release. "It is a prelude to a complete refinancing of our banking agreements presently underway. We have taken advantage of favorable market conditions to generate funds to fuel our future growth."

Proceeds will be used to repay a $25 million bridge loan and reduce amounts outstanding under the company's committed bank revolver.

The company last reopened the issue in a C$50 million offering on May 30, 2011 at 106.5, resulting in an 8.08% yield to worst and an 8.3% yield to maturity.

The original C$75 million issue priced at 98.148 on March 8, 2010 to yield 10 1/8% as part of a deal that also included $250 million of the notes priced with the same terms but in U.S. dollars.

The total outstanding now is C$175 million.

In secondary trading, the notes due 2017 rose to 103 bid, a trader said.

Garda World is a Montreal-based security services, cash logistics and global risk consulting provider.

Cash Store better

Cash Store Financial's 11½% notes due Jan. 31, 2017 (B3/B/) traded higher at 97 on Friday, a trader said.

The company sold C$132.5 million of the notes at 94.608 on Tuesday.

Edmonton, Alta.-based Cash Store Financial provides broker and short-term lending services.

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