Manitoba sells $600 million; British Columbia program expected to carry on; banks hold

By Cristal Cody

Prospect News, Aug. 29 - The Province of Manitoba sold a U.S. dollar-denominated $600 million offering of 10-year global debentures on Wednesday, while domestic activity stayed fairly light, bond sources said.

The Province of British Columbia's fiscal 2012-13 debt issuance is not expected to be impacted by the resignation of the province's finance minister on Wednesday, a bond source said.

"We feel OK saying 'no, it won't affect it,'" the source said.

British Columbia deputy premier and finance minister Kevin Falcon resigned effective immediately, citing personal reasons.

The province (Aaa/AAA/DBRS: AA) is expected to add about C$4 billion of debt over the fiscal year.

Otherwise, market activity slowed ahead of the long holiday weekend in the Canadian and U.S. markets.

"Pretty quiet," one source said. "It's a half-day here in the bond markets on Friday."

Secondary activity also continued to stay light a second day, another source said.

Canadian bank paper, including Bank of Nova Scotia and Bank of Montreal, traded flat to 1 basis point better on the day, a third source said.

The Markit CDX Series 18 North American investment-grade index ended flat at a spread of 101 bps.

The Markit CDX Series 18 North American high-yield index inched up to 98.20 from 98.12.

Canadian government bonds were mixed, with the shorter end of the curve better on the day. Canada's two-year note yield fell 2 bps to 1.15%. The 10-year note yield closed flat at 1.80%, and the 30-year bond yield rose 1 bp to 2.37%.

Manitoba raises $600 million

In the U.S. market on Wednesday, the Province of Manitoba priced $600 million of 2.1% 10-year global debentures to yield Treasuries plus 43.85 bps, or mid-swaps plus 34 bps, a market source said.

The deal had been announced on Tuesday and went overnight to allow participation from a broader range of investors, the source said.

The securities (Aa1/AA/) were priced at 99.973 to yield 2.103%.

The debentures will be non-callable.

Bookrunners were CIBC World Markets Corp., HSBC Securities (USA) Inc., National Bank of Canada Financial and Scotia Capital (USA) Inc.

Co-managers were RBC Capital Markets, LLC, TD Securities (USA) LLC, BMO Capital Markets Corp. and Casgrain & Co. Ltd.

Proceeds will be used for advances to Manitoba Hydro and/or for general government programs.

Andrea Heisinger contributed to this review

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