Export Development Canada upsizes Aussie sale to A$750 million; light deal calendar eyed

By Cristal Cody

Prospect News, July 27 - Export Development Canada tapped the Australian market on Friday with an upsized offering of A$750 million of five-year bonds, an informed source said.

"The books were really in good shape," the source said. "To upsize from A$300 [million] to A$750 [million] is a really good showing."

The deal follows the Province of Manitoba's (Aa1/AA//) A$200 million offering of 4.25% 10-year Kangaroo bonds on Thursday.

"The Aussie market continues to be frothy," a bond source said. "A couple of other issuers are taking a look at Aussies right now."

The Canadian markets ended the week mostly quiet with no domestic issuance on Friday.

"It's positive, but it's really quiet," one corporate bond source said.

Details emerged for the bond offerings from PowerStream Inc. and Hydro One Inc.

New issuer PowerStream sold C$200 million of 30-year senior debentures, while Hydro One priced C$75 million of 50-year medium-term notes. Hydro last tapped the Canadian debt markets on Jan. 10, 2012 with an offering of C$300 million of 10-year notes.

Light primary activity is forecast for the Canadian corporate and provincial markets in the week ahead, sources said.

"If we've got a couple days of stability in credit tone, it's possible we'll see a couple others issue next week," one source said.

Calgary, Alta.-based DirectCash Payments Inc. is expected to price C$125 million of seven-year senior notes (B3/B/) in the upcoming week following a roadshow, a bond source said.

Corporate bonds traded stronger on Friday. The Markit CDX Series 18 North American investment-grade index firmed 6 basis points to a spread of 105 bps.

The Markit CDX Series 18 North American high-yield index rose to 97.39 from 96.18.

A sell-off sent Canadian and U.S. government bond yields up across the curve on Friday. Canada's 10-year note yield jumped to 1.75% from 1.64%. The 30-year bond yield closed 6 bps higher at 2.33%.

Bonds upsized, sold

In the Kangaroo bond sale, Export Development Canada (Aaa/AAA//) sold A$750 million of 3.25% five-year bonds at 99.021 to yield 3.465% on Friday, an informed bond source said.

The bonds due Aug. 8, 2017 priced in line with guidance at a spread of the three-month bank bill swap rate plus 21 bps, or 103 bps over the Aussie government benchmark.

The deal was upsized from A$300 million.

TD Securities Inc., Citigroup Global Markets Inc. and Commonwealth Bank of Australia were the lead managers.

Ottawa-based Export Development Canada provides financing, insurance and risk management to Canadian exporters and investors.

PowerStream taps market

PowerStream's private placement of C$200 million of 30-year senior debentures was detailed on Friday.

The company sold the debentures due July 30, 2042 at par to yield 3.958%, or a spread of 174 bps over the Government of Canada benchmark, a source said.

BMO Capital Markets Corp. was the bookrunner. Co-managers were TD Securities and CIBC World Markets Inc.

The company (/A/DBRS: A) held a two-day roadshow earlier in the week.

The debentures may be redeemed at the Canadian bond yield plus 43.5 bps.

PowerStream is the second largest municipally owned electric distributor in Ontario.

Hydro One sells 50-year notes

Terms of Hydro One's C$75 million offering of 50-year medium-term notes also emerged on Friday.

The 3.79% notes due July 31, 2062 (A1/A+/DBRS: A) priced at 99.978 to yield 3.791%, or a spread of 153 bps over the Government of Canada benchmark, an informed source said.

RBC Capital Markets Corp. was the bookrunner. Co-managers were TD Securities, BMO Capital Markets, CIBC World Markets Inc., Scotia Capital Inc., Desjardins Securities Inc., HSBC Capital (Canada) Inc., Casgrain & Co. Ltd., Laurentian Bank Securities, Inc., Bank of America Merrill Lynch and National Bank Financial Inc.

The notes are callable at 38 bps over the Government of Canada benchmark.

Toronto-based Hydro One provides electricity in the Province of Ontario.

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