Heico Canada plans C$130 million sale of 10-year notes; Canadian bonds flat

By Cristal Cody

Prospect News, Oct. 5 - In the Canadian corporate bond market, Heico Cos. LLC and Heico Holding Inc. are planning a $120 million sale of 10-year senior unsecured notes, a market source said.

Heico Canada Holding Co., which is an indirect subsidiary of Heico Holding, is also planning a C$130 million sale of 10-year senior unsecured notes.

The notes (/BBB-/BBB-) are being priced under Rule 144A.

J.P. Morgan Securities LLC and UBS Investment Bank are the bookrunners.

Proceeds are being used for general corporate purposes, including the repayment of debt.

The buyer of distressed companies in the industrial and manufacturing sector is based in Downers Grove, Ill.

Canada to auction C$3 billion

Canadian bonds were down to mostly unchanged on Tuesday ahead of the Bank of Canada's auction and economic data due this week.

Coming up on Wednesday, Canada is scheduled to sell C$3 billion in 3.25% notes due 2021.

Government bonds fell on light data on Tuesday, a source said.

The Canadian 10-year note yielded 2.766%, up from 2.74%. The two-year note yielded 1.367% from 1.36% late Monday.

U.S. Treasuries rallied on the short end while the long end fell on Tuesday as expectations the Federal Reserve will implement another round of quantitative easing weighed on bonds.

The yield on two-year notes dropped to 0.33% from 0.4%. The yield on the benchmark 10-year note fell 2 bps to 2.46%.

The speculation was fueled by a surprise announcement by the Bank of Japan that it cut its target interest rate to a range of 0% to 0.1% from 0.1% and established a quantitative easing program of $60 billion to buy corporate bonds, real estate investment trusts, government bonds and commercial paper.

Also affecting the U.S. and Canadian markets on Tuesday, the Reserve Bank of Australia was expected to raise rates by 25 bps. Instead, the bank left rates unchanged at 4.5%, although it indicated the potential to raise rates in the future.

Japan and Australia's moves "will give ground for the Fed to employ QE as well," strategists at Confluence Investment Management LLC said in a research note on Tuesday.

Treasuries have rallied on expectations the Fed will resume purchases of government debt. Fed chairman Ben Bernanke said Monday that a new round of asset purchases would stimulate growth.

On Tuesday, the Federal Reserve purchased $5.19 billion of Treasuries due from 2016 through 2020 as part of its program to reinvest proceeds from mortgage-backed securities.

The Bank of Canada has raised its benchmark rate three times, the latest to 1% on Sept. 8. Market participants have said that odds have fallen for a fourth hike after Bank of Canada governor Mark Carney said the previous week that additional increases would be carefully considered.

Coming up on Wednesday, Canadian investors will weigh results from the Ivey purchasing managers index that shows Canadian business and government spending in September. Also ahead this week, Canada's September employment figures are set for release.

Andrea Heisinger contributed to this review

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