Canadian Utilities taps market; Athabasca Oil, Mattamy set price talk; Yellow Media rises

By Cristal Cody

Prospect News, Nov. 6 - The Canadian markets saw the week's first pricing action on Tuesday with an offering of C$200 million of 3.122% 10-year debentures from Canadian Utilities Ltd., while the high-yield sector is expected to heat up with deals over the week and month, informed bond sources said.

Canadian Utilities' offering was not allowed to grow and priced at 130 basis points over the Government of Canada benchmark with 50-plus buyers, a syndicate source said.

"It had a pretty good response," the source said.

"It wasn't cheap and it wasn't expensive - it seemed to be fairly priced. Immediately afterwards, it was 2 or 3 [basis points] inside of that. I doubt much came out just because for a deal that small, no one really wanted to give up what they got."

In the high-yield market, Mattamy Group Corp. set price talk for its $450 million-equivalent dual-currency offer of eight-year senior notes expected to price on Wednesday.

Price talk on Athabasca Oil Corp.'s expected offering of C$600 million of senior secured second lien notes due 2017 also emerged on Tuesday.

Petaquilla Minerals Ltd.'s dollar-denominated deal also remains in the market, according to an informed source.

In another dollar-denominated offering, Ainsworth Lumber Co. Ltd. is expected to price $350 million of bonds later in November.

Rick Eng, chief financial officer of Ainsworth Lumber, said in an interview that, as noted on the quarterly conference call, "We're looking at debt alternatives and looking to do this at this quarter."

The deal has not launched yet, but "Q4 is the objective," he said.

One bond source expects the deal to launch the week of Nov. 12.

Canadian bond markets mostly were quiet on Tuesday as voting in the U.S. presidential election continued over the day.

"Really, no one wants to take a position until they tell which way the markets are going to go," one source said.

Secondary trading in the high-yield sector also was light on the day.

"Nothing much going on - it's pretty quiet," a trader said. "It's kind of grinding higher but some stuff is unchanged. Everyone is focused on when new issues come."

Golf Town Canada Inc.'s 10.5% senior second-lien notes due 2018 traded higher along with Yellow Media Inc.'s senior notes.

Yellow Media released its third-quarter report and updated investors on its debt recapitalization plan on Tuesday.

"Yellow Media reported today. They're up a point," the trader said.

The Markit CDX Series 18 North American investment-grade index firmed 1 bp to a spread of 96 bps.

The Markit CDX Series 18 North American high-yield index rose to 99.85 from 99.53.

Government bonds ended weaker as stocks gained on the day. Canada's 10-year note yield rose 4 bps to 1.80%. The 30-year bond yield rose to 2.38% from 2.35%.

Canadian Utilities debentures

In primary action on Tuesday, Canadian Utilities brought an offering of C$200 million of 3.122% 10-year debentures (/A/DBRS: A) that priced at par, an informed bond source said.

The debentures due Nov. 9, 2022 priced at a spread of 130 bps over the Government of Canada benchmark, on the tight end of guidance of 133 bps, plus or minus 3 bps.

BMO Nesbitt Burns Inc., RBC Dominion Securities Inc., TD Securities Inc. and Scotia Capital Inc. were the lead managers.

Proceeds will be used to finance capital expenditures, repay existing debt and for other general corporate purposes.

Calgary, Alta.-based Canadian Utilities, which is part of the ATCO Group of Cos., operates utilities, energy, structures and logistics and technology companies.

Mattamy sets price talk

Mattamy Group set price talk for its $450 million-equivalent dual-currency offer of eight-year senior notes (B1/BB) on Tuesday, according to informed sources.

The deal features dollar-denominated notes, which are talked with a yield in the 6½% area, and a tranche of Canadian dollar-denominated notes, which are talked to yield in the area of 6 7/8%, or 37.5 basis points behind the yield of the dollar-denominated notes.

The books close at 11 a.m. ET on Wednesday, and the deal is set to price thereafter.

Credit Suisse Securities (USA) LLC, RBC Capital Markets and Citigroup Global Markets are the joint bookrunners.

The Rule 144A for life notes will become callable in three years at par plus 75% of the coupon. The notes feature a three-year 35% equity clawback and a 101% poison put.

The Burlington, Ont.-based homebuilder plans to use the proceeds to refinance existing debt.

Athabasca Oil deal

Athabasca Oil's offering of C$600 million of senior secured second lien notes due 2017 was talked to yield in the low 7% area, a bond source said on Tuesday.

The company started a roadshow for the notes (DBRS: B) on Monday. The Rule 144A-, Regulation S-eligible issue will be offered on a private placement basis in Canada.

The notes are expected to price on Friday.

TD Securities Inc. and GMP Capital Inc. are the lead managers.

The company also is negotiating about C$150 million of senior secured first-lien revolving credit facilities with a syndicate of financial institutions.

Proceeds from the private placement and the credit facilities will be used for general corporate purposes, including to advance the company's thermal oil projects and develop its light oil assets.

Athabasca Oil is a Calgary, Alta.-based based oil sands developer.

Inmet ends bid for Petaquilla

Petaquilla Minerals announced that Inmet Mining Corp. decided to allow its tender offer for Petaquilla shares to expire, ending Inmet's hostile takeover bid.

In the press release Petaquilla announced that it will continue to implement its business plan, including the spin-out of its infrastructure business to shareholders, the development of its Lomero-Poyatos gold mine in Spain and its previously announced high-yield note offering.

When Inmet undertook the takeover bid in mid-summer, the company asserted that Petaquilla should not go forward with the bond deal.

However, in mid-October, Petaquilla talked its $210 million of offering of five-year senior secured notes (Caa1) with a 12% yield, as well as attached warrants for shares of the company's common stock.

Proceeds will be used to refinance debt and to finance capital expenditures related to the Lomero-Poyatos mine.

The deal does indeed remain in the market, and informed source said on Monday.

Ainsworth deal ahead

Ainsworth Lumber (B3/B-/) is expected to launch the U.S. dollar-denominated offering of $350 million of bonds the week of Nov. 12, according to a bond source.

Bank of America Merrill Lynch is expected to lead the deal.

The company launched a rights offering of C$175 million of common stock on Friday.

Proceeds from the debt and common share offerings will be used to repay the company's senior secured term loan due 2014 and to refinance its 11% senior notes due July 2015.

Ainsworth is a Vancouver, B.C.-based manufacturer of engineered wood products.

Golf Town catches bid

In secondary trading, the 10.5% senior second-lien notes due 2018 from Golf Town Canada traded up half a point on Tuesday to 100.75 bid, a trader said.

Golf Town sold $125 million of the notes (/B/DBRS B low) at par on July 13.

Markham, Ont.-based Golf Town is a specialty golf retailer.

Yellow Media better

Yellow Media's 7.3% senior notes due 2015 (/CC/DBRS: D) and other notes traded up a point to 64.00 bid, 65.00 offered, a trader said on Tuesday.

Yellow Media said on Tuesday that third-quarter revenue fell 17.2% to C$267.7 million.

The company also said it is awaiting a decision from the Quebec Superior Court on approval of its proposed recapitalization plan to reduce debt.

Montreal-based Yellow Media is a Canadian directory publisher.

Paul A. Harris contributed to this review

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