Bank of Nova Scotia raises C$1 billion in reopening; Connacher climbs; Cash Store rises

By Cristal Cody

Prospect News, July 6 - The Bank of Nova Scotia priced C$1 billion in a reopening of its three-year deposit notes on Friday afternoon as bank deposit note spreads improved over the week.

"That's the only supply in both corporate and government Canadian markets this week," a bond source said on Friday. "It was definitely a quiet start to the month. We're approaching a historically slower month in Canada."

The deal came as three- and five-year deposit note spreads firmed as much as 5 basis points to 10 bps on the week, a source said.

"Bank deposit note spreads have rallied over the course of the week, and that's on back of the weak global market tone," the bond source said. "There was a lot of movement for bank deposit notes in the week."

Investment-grade bonds overall moved out over the day. The Markit CDX Series 18 North American investment-grade index eased 4 bps to a spread of 113 bps.

Canadian high-yield bonds traded stronger on the week. Connacher Oil & Gas Ltd.'s second-lien notes rose 8 points in secondary trading from a week ago, a source said on Friday.

Also in the high-yield secondary market, Cash Store Financial Services Inc.'s 11½% senior secured notes due 2017 rose 1 point on the week.

Canadian government bonds traded higher on the shorter end of the curve following the U.S. Labor Department's weaker June jobs report, despite a positive Canadian jobs report. Canada's 10-year note yield dropped 4 bps to 1.69%. The 30-year bond yield fell 1 bp to 2.30%.

Statistics Canada said the unemployment rate fell 0.1% to 7.2% in June.

Primary action eyed

Primary activity is expected in the week ahead following a roadshow from Golf Town Canada Inc. and Golfsmith International Holdings, Inc. in New York on Monday and in Toronto on Tuesday and Wednesday.

The companies plan to price C$150 million of senior second-lien notes (/B/DBRS: B) that include 150,000 units each comprised of C$700 of senior second-lien notes from Golf Town Canada and C$300 of senior second-lien notes from Golfsmith International.

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

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

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

Also coming up, Great Canadian Gaming Corp. (Ba3) intends to hold a roadshow for a high-yield Rule 144A offering of C$400 million of senior notes in Vancouver, B.C., on Wednesday, New York and Boston on Thursday and July 13 and Toronto on July 16 and July 17.

The deal will price in Canada via a private placement.

Scotia Capital and HSBC Capital (Canada) are the bookrunners. BMO Capital Markets, CIBC World Markets Inc. and RBC Capital Markets Corp. are joint lead managers. National Bank Financial is the co-manager.

The Richmond, B.C.-based gaming, entertainment and hospitality company has operations in Canada and the United States.

Bank of Nova Scotia prices

In primary activity on Friday, Bank of Nova Scotia (Aa1/AA-/DBRS: AA) sold C$1 billion in a reopening of its 2.25% three-year deposit notes at 100.654 to yield 2.01%, a bond source said.

The notes due May 8, 2015 priced at a spread of 94 bps over the Government of Canada benchmark.

Scotia Capital was the bookrunner.

Scotiabank first sold the issue on May 3 in a C$1 billion offering that priced at 99.977 to yield 2.251%, or 81 bps over the bond curve. The total outstanding is C$2 billion.

Toronto-based Bank of Nova Scotia is a global financial services provider.

Connacher climbs

Connacher Oil & Gas' 8¾% senior notes due 2018 climbed to 88 bid going out on Friday, up from 80 bid a week ago in trading, a source said.

The issue priced in a C$350 million offering on May 20, 2011 at par.

Connacher has been underway in a strategic review since it rejected an unsolicited takeover offer in December.

The integrated oil company is based in Calgary, Alta.

Cash Store rises

Cash Store's 11½% senior secured notes due 2017 rose to 95 bid on Friday, up from 94 bid a week ago, a bond source said.

The company sold C$132.5 million of the notes (B3/B/) on Jan. 24 at 94.608.

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

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