CU sells long-dated debt; Export Development Canada prices; GreenField Ethanol plans deal

By Cristal Cody

Prospect News, Oct. 19 - Canada's bond market activity continued to pick up on Wednesday with a deal priced from CU Inc. and the second high-yield deal announcement this week, bond sources said.

In Canada, CU sold C$700 million of 30-year to 50-year debentures.

Separately, Export Development Canada was in the U.S. high-grade market with the sale of $1 billion of five-year notes on Wednesday.

Coming up in Canada's high-yield market, GreenField Ethanol Inc. intends to have a roadshow for C$175 million of five-year senior second-lien notes.

On Monday, Cara Operations Ltd. broke a three-month lull in primary activity with the announcement it plans to sell C$75 million of five-year senior second-lien guaranteed notes (/BB-/DBRS: B). A roadshow will be held for the notes on Thursday and Friday.

Canadian government bonds closed better with yields down 1 basis point on the two-year note to 1.03%. The 10-year note also fell 1 bp to 2.33%. The 30-year bond yield was unchanged at 2.93%.

Canada saw softer demand for its auction of C$3.5 billion of two-year notes at an average yield of 1.097%, but the auction still was considered strong since the notes traded about 1 bp tighter, a bond source said.

"Demand was a bit lower than usual, but the auction came fairy strong," the source said.

Bonds started weaker early in the day but pared losses going out.

"The market had weakened going into the auction by about 5 basis points. It's come back in about 3 [bps] now," a source said.

Primary sees new supply

Export Development Canada sold $1 billion of 1.25% five-year notes on Wednesday to yield mid-swaps plus 8 bps, or Treasuries plus 26.9 bps, a market source said.

The notes (Aaa/AAA/) were sold wider than talk of mid-swaps plus 6 bps, the source said.

The securities priced at 99.696 to yield 1.313%. The paper is non-callable.

BNP Paribas Securities Corp., HSBC Securities plc, J.P. Morgan Securities LLC and RBC Capital Markets LLC were the bookrunners.

The government-backed credit agency for exporters is based in Ottawa.

CU sells debentures

In the domestic market, CU sold C$700 million of 30-year and 50-year debentures (DBRS: A) on Wednesday, according to a company statement.

The company priced C$500 million of debentures due Oct. 24, 2041 at par to yield 4.543%.

In the second tranche, the company sold C$200 million of debentures due Oct. 24, 2061 at par to yield 4.593%.

BMO Capital Markets Corp., RBC Capital Markets, TD Securities Inc. and Scotia Capital Inc. were the managers.

Proceeds will be used to finance capital expenditures, to repay existing debt and for other general corporate purposes of ATCO Electric Ltd. and ATCO Gas and Pipelines Ltd.

Alberta-based CU operates rate-regulated utility operations in pipelines, natural gas and electricity transmission and distribution. The company is a subsidiary of Canadian Utilities Ltd., which is part of the ATCO Group of Companies.

GreenField Ethanol on tap

GreenField Ethanol intends to have a roadshow for C$175 million of five-year senior second-lien notes (DBRS: B), according to an offering memorandum dated Wednesday.

GreenField Ethanol will hold a roadshow for the notes due 2016 Monday through Nov. 2 in Vancouver, B.C., Montreal and Toronto.

Scotia Capital Inc. is the lead manager.

The notes are non-callable for three years. The deal has a change-of-control put at 101% and an equity clawback for up to 35% in the first three years. The notes also have a Canada call at 50 bps over the Canadian government benchmark.

The guarantors are GreenField Ethanol (Johnstown) Inc.; GreenField Ethanol (Hensall) Inc.; GreenField Hensall LP; GreenField Hensall GP Inc.; Pharmco Products Inc.; Aaper Alcohol and Chemical Co., Aaper Holdings Inc.; GreenField Ethanol of Quebec Inc. and all future restricted subsidiaries of GreenField.

Proceeds will be used to repay debt, to terminate amounts outstanding under existing interest rate swap agreements and for general corporate purposes.

Ontario-based GreenField Ethanol is Canada's largest ethanol company and produces industrial and beverage alcohol, fuel ethanol and distillers' grains.

Andrea Heisinger contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.