Ontario sells €1.25 billion in notes; new supply ahead; Rogers Communications' notes firm

By Cristal Cody

Prospect News, Sept. 24 - The Canadian bond market was mostly quiet on Friday, but debt traded on a good market tone, while the Province of Ontario completed the sale of €1.25 billion in 3% 10-year global notes, according to sources.

Ontario sold €1.25 billion in 3% global notes due Sept. 28. 2020 to yield 3.075%, according to a final terms pricing sheet from the Ontario Financing Authority on Friday.

The series 107 notes (Aa1/AA-/) priced at 99.363.

The joint lead managers were Barclays Bank PLC; Credit Suisse Securities (Europe) Ltd.; Deutsche Bank Securities Inc.; and J.P. Morgan Securities Ltd.

The notes are expected to start trading on the London Stock Exchange on Tuesday.

Canadian government bonds fell on Friday, following the line of U.S. Treasuries. Canada's benchmark 10-year government bond yield rose to 2.865% from 2.834%. The two-year note yielded 1.467% compared to 1.41%.

U.S. Treasuries also fell on the long end, sending yields up. The yield on the 10-year Treasury note rose 6 bps to 2.61%. The two-year note yield gained 3 bps to 0.44%.

In the corporate bond market, the day was considered quiet on all fronts by traders and market observers in Canada and the United States.

"Secondary volumes would be called fair," a source said Friday. "Not as robust as we saw them earlier in the week, but not unusual for a Friday. Credit's a little bit tighter on the day."

No new deals priced on Friday, but new supply is expected in the week ahead, one source said.

"It is September - we normally see a fair amount of issuance," the source said.

No blackout

Unlike in the United States, which is approaching what's called a "blackout" season as companies wrap up any debt sales ahead of their fiscal yearends in October, deals are expected to continue in the Canadian market.

"That doesn't normally have an impact on our flow," the source said. "Right now the market is in very good shape and we've had some very successful deals over the last several weeks, so there's no reason we couldn't have more supply."

Three companies completed deals over the week, including Rogers Communications Inc. and Calloway Real Estate Investment Trust, which sold C$100 million in 5% bonds due 2019 at par. The Vaughan, Ont.-based REIT invests in retail shopping centers in Canada.

Also in the market, pipeline operator Enbridge Inc. sold C$300 million in two tranches of bonds (DBRS: A) on Thursday.

"There was good demand for the new issues all this week," a source said.

Enbridge priced C$200 million in 10-year notes at a spread of 144.3 bps over Canadian government benchmark bonds. The notes were mostly unchanged in secondary trading.

"The 10-year opened the day at 144 bid," a source said. "The tone was just so good today, it's hard to believe they're anywhere wider."

The second tranche of bonds due 2040 priced at a spread of 170 bps over the Canadian government bond due 2037.

"It's bid today at 170," the source said.

Rogers notes firm

Rogers Communications' new deal traded tighter in the secondary, a source said.

The company sold C$900 million in 4.7% 10-year senior notes (DBRS: BBB) at a spread of 185.2 bps over the Canadian government benchmark bond on Wednesday.

The notes firmed by Friday afternoon, a source said.

"We opened those at 183, 178, so they're doing better," the source said.

Toronto-based Rogers Communications provides wireless voice and data, cable television, internet and telephone services in Canada.

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