Enbridge drives by with C$400 million offering of 30-year bonds; Postmedia notes unchanged

By Cristal Cody

Prospect News, Aug. 22 - Enbridge Inc. tapped the Canadian bond markets on Wednesday in a C$400 million offering, double the minimum target, an informed source said.

The Calgary, Alta.-based oil and gas company is a "name very familiar with Canadian investors," the source said.

Enbridge sold C$400 million of the 30-year medium-term notes to good demand.

"The transaction went really very good," the source said. "We definitely see a huge bid for the product, especially the long end. We haven't had that much supply recently."

The last long bond corporate deal in the Canadian markets was on Aug. 13. Hydro One Inc. sold C$235 million in a reopening of its 3.79% 50-year medium-term notes.

Primary activity during the rest of the week likely will be muted, according to bond sources.

"We expect the remaining week to be very quiet," one bond source said.

In the secondary market, Enbridge's 30-year notes were holding at the issue price.

Postmedia Network Inc.'s 8¼% senior secured first-lien notes due 2017 sold earlier in the month traded mostly unchanged on Wednesday.

There was "no real change" in the paper, a trader said. "It's been in that zone for the past week or so, plus or minus 1/8."

Bonds traded mostly flat with light secondary activity on Wednesday, bond sources said.

The Markit CDX Series 18 North American investment-grade index ended unchanged on the day at a spread of 99 bps.

The Markit CDX Series 18 North American high-yield index fell to 98.41 from 98.54.

Government bonds rallied on Wednesday, and Canadian bond yields dropped more than 7 bps across the curve. Canada's 10-year note yield closed 11 bps lower at 1.84%. The 30-year bond yield fell 7 bps to 2.41%.

In the day's economic data, Statistics Canada said retail sales fell 0.4% to C$38.7 billion in June.

Enbridge raises C$400 million

In Canadian primary action on Wednesday, Enbridge brought an upsized C$400 million of 4.24% 30-year medium-term notes, priced at 99.932 to yield 4.244%, an informed bond source said.

The notes due Aug. 27, 2042 (Baa1/A-/DBRS: A) came at a spread of 180 bps over the Government of Canada benchmark.

The deal was upsized from C$200 million.

Scotia Capital Inc., CIBC World Markets Inc. and RBC Capital Markets Corp. were the joint lead managers. Co-managers were BMO Capital Markets Corp., TD Securities Inc., HSBC Capital (Canada) Inc., National Bank Financial Inc., Deutsche Bank AG, J.P. Morgan Securities Inc. and Merrill Lynch Canada Inc.

The notes are callable at the Canada bond yield plus 45 bps.

After the bonds priced, the paper traded at 180 bps bid, wrapped around the issue price, a source said.

Enbridge is a Calgary, Alta.-based oil and gas distributor and transportation company.

Postmedia unchanged

Postmedia Network's 8¼% senior secured first-lien notes due 2017 (Ba3/B+/) traded at 100 5/8 bid, 101 3/8 offered, a trader said on Wednesday.

The notes were wrapped around 101 on Tuesday.

Postmedia sold C$250 million of the five-year notes (Ba3/B+/) at par on Aug. 9.

The company, a subsidiary of Postmedia Network Canada Corp., is a Toronto-based newspaper publisher.

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