Nova Scotia sells 50-year bond add-on; Newalta tightens, Paramount Resources cheaper

By Cristal Cody

Prospect News, May 9 - The Province of Nova Scotia saw a "good outing" for the sale of C$322.8 million in a reopening of its 50-year bonds on Wednesday, an informed bond source said.

"It's also a little bit tricky - the 50-year term isn't all that common, but we had good distribution," the source said.

One or two more provincial deals may price before the week is over, a bond source said.

"There are certainly other issuers waiting in the wings to get something done," the source said. "Today was OK, it seemed worse when we walked in this morning, but things stabilized this afternoon. A couple of provinces may want to get something done tomorrow or Friday."

Provincial and corporate bonds have traded weaker over the week. Five-year provincial notes are trading about 2 bps wider, while 10-year and 30-year bonds are about 4 bps wider than the start of the week, a source said.

"It's a little softer today," the source said. "We opened up; spreads were 1 basis point wider across the curve. It's been a challenging week so far for the provincial market."

Corporate bonds were weaker a third day. The Markit CDX Series 18 North American investment-grade index eased 2 bps to a spread of 103 bps.

In the high-yield market, Newalta Corp.'s senior notes (B1//DBRS:BB) are tighter following strong first-quarter earnings results, a source said on Wednesday.

Paramount Resources Ltd.'s bonds continue to trade cheaper in the secondary market.

Government bonds ended the day mostly flat. Canada's 10-year note yield rose 2 bps to 1.99%. The 30-year bond yield was unchanged at 2.51%.

Nova Scotia reopens bond

The Province of Nova Scotia (Aa2/A+/DBRS: A) sold C$322.8 million in a reopening of a 3.5% 50-year bond at 98.625 to yield 3.559% on Wednesday, an informed bond source said.

The bonds due June 2, 2062 priced at a spread of 105.5 bps over the Government of Canada benchmark.

TD Securities Inc., BMO Capital Markets Corp., CIBC World Markets Inc. and RBC Capital Markets Corp. were the lead managers.

The province reopened the bonds on Jan. 23 to sell C$195.5 million at 97.232 to yield 3.62%. The province initially sold C$150 million of the issue on Jan. 17 at 100.074 to yield 3.497%. The total outstanding is C$668.3 million.

Newalta stronger

In Canada's secondary market, Newalta's 7 5/8% notes due 2017 and 7¾% notes due 2019 traded at 106.25 bid late in the day, a source said.

Newalta sold C$125 million of the five-notes at par on Nov. 18, 2010 and priced C$125 million of the seven-year notes at par on Nov. 8, 2011.

The company said on Tuesday that first-quarter revenue climbed 9% to C$166.5 million and earnings fell 8% to C$4.82 million. The company also increased its quarterly dividend by 25% to 10 cents a share from 8 cents a share starting with the dividend payable on June 29.

Newalta is a Calgary, Alta.-based industrial waste management and environmental services company.

Paramount Resources lower

Paramount Resources' 8¼% senior notes due 2017 (Caa1/B+) traded on Wednesday at 101 bid, a bond source said.

The notes have dropped since trading in March in the 103.375 bid area.

Paramount Resources originally priced C$300 million of the notes on Nov. 30, 2010 at par and reopened the issue on Jan. 28, 2011 to sell C$70 million at 103 to yield 7.602%.

The company said on Tuesday that first-quarter profit jumped to C$124.5 million from a loss of C$12 million in the same period last year.

Calgary, Alta.-based Paramount Resources is an oil and natural gas exploration, development and production company.

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