Trident Resources, Masonite plan bond deals; Precision Drilling, Nortel Networks improve

By Cristal Cody

Prospect News, April 4 - Corporate bonds in the Canadian market remained "well supported" on Monday, according to a bond market strategist.

"Looks like a lot more buying than selling at the end of last week," the source said. "So far this week, it seems fairly quiet."

The previous week was ripe with new corporate bond deals. A few deals are expected over the upcoming week, though not at the same pace, a source said.

"Last week was a pretty busy week," the source said. "There are still a number of names looking to tap the market; it will be a matter of timing it right for them."

Two deals are expected from Trident Resources Corp. and Masonite International Corp., according to sources.

In the secondary market, Precision Drilling Corp.'s notes traded up, a source said. The 6.5% notes due 2019 (Ba2/BB+) were quoted Monday at 100.5 bid, 101.5 offered. The notes priced at par on March 10.

Precision is a Calgary, Alta.-based equipment and services provider for the oil and gas industry.

The day's "most notable mover" was Nortel Networks Ltd. The Canadian company's debt popped 1 to 2 points on the day on news Google Inc. had made a $900 million stalking horse bid for Nortel's patent portfolio.

The portfolio is the last significant asset the company has, having sold off most of its business since filing for bankruptcy protections in 2009.

Canada's government bonds ended slightly stronger but underperformed U.S. Treasuries. The two-year note yield fell 2 basis points to 1.81%, while the 10-year note yield dropped 2 bps to 3.35%. The 30-year bond yield fell 1 bp to 3.77%.

The Bank of Canada in its quarterly survey of 100 companies released Monday revealed continued inflation concerns.

"In Canada, initially it was taking a negative on the outlook survey," a source said. "Expectations for future sales fell but underlying details were a little bit firmer, especially inflation which actually rose. Canada's is ending a little bit worse than the U.S. across the curve because the market is focusing in on some of the positives."

Masonite offers 10-year notes

Masonite International plans to price a $250 million offering of 10-year senior notes late in the April 4 week, according to an informed source.

Merrill Lynch, Wells Fargo Securities, Deutsche Bank Securities Inc. and RBC Capital Markets are the joint bookrunners for the Rule 144A for life offering.

The notes become callable in four years at par plus 75% of the coupon. The notes feature a 101% poison put.

Credit ratings remain to be determined.

The Mississauga, Ont.-based door manufacturer plans to use the proceeds for general corporate purposes, which may include funding future acquisitions and a return of capital to shareholders.

Trident to sell C$175 million

Trident Resources plans to sell C$175 million of seven-year notes (/B-/), according to sources.

CIBC World Markets Inc. is the lead manager.

The notes are being marketed over the week.

Proceeds will be used to pay down outstanding debt.

Trident Resources is a Calgary, Alta.-based natural gas exploration company with operations in Alberta and British Columbia.

Nortel up on Google bid

Nortel Networks' debt was the day's "most notable mover," a trader said, as Google made a $900 million play for the company's patent portfolio.

The trader said the 10.75% notes due 2016 were "up a couple points" at 92.5 bid, 93 offered.

Another trader deemed the bonds up 1.75 points to 2 points, also at 92.5 bid, 93 offered.

The second trader said the 10.125% notes due 2013 were also trading in that range, up 1.5 to 2 points on the day.

A third trader said that Nortel Networks was "an active name" on Monday on the news related to the bankrupt Toronto-based telecommunications equipment company's upcoming auction of its patents portfolio.

He saw the company's 10.75% notes due 2016 up at much as 3 points during the session before finishing at 92.5 bid, 93 offered, which he called up 2.5 points, "at least, on decent volume in the name."

He said that Nortel's busted convertible issues, like its 1.75% notes due 2012 and 2.125% notes due 2014, were active, trading up a couple of points at 88 bid.

Google's bid will be the stalking horse bid in an auction to sell off one of the Toronto-based telecommunications company's last remaining assets. It is expected that the price could climb much higher as bidders vie for the portfolio of about 6,000 patents and patent applications.

Nortel filed for bankruptcy protection in January 2009 and has been selling off assets ever since.

Proceeds from the sale of the patent portfolio will be used to pay off creditors. Equity holders will receive nothing from a potential sale.

Paul A. Harris, Paul Deckelman and Stephanie N. Rotondo contributed to this review

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