Ontario reopens long bonds; Plenary Health on roadshow for C$1 billion; calendar builds

By Cristal Cody

Prospect News, Sept. 9 - The Canadian bond markets ended the week weaker but saw more deal activity with expectations for new offerings in the upcoming week, sources said Friday.

On Thursday, deals were brought in the corporate and provincial markets with a sale from Daimler Canada Finance Inc. and an upsized offering from the Province of Ontario.

Coming up, Plenary Health Care Partnerships Humber LP is scheduled to hold a roadshow for an offering of more than C$1 billion in three tranches of bonds (/A/DBRS: A), according to sources.

Other roadshows also are scheduled through the next two weeks, though no specific deals are scheduled, a bond source said.

"Could be busy," the source said.

For example, National Australia Bank will hold a non-deal roadshow on Monday in Toronto.

The bank has a fixed-to-floating-rate subordinated maple bond originally issued in September 2006 that is scheduled to be called on Sept. 21.

"They may or may not refinance it in Canada," the bond source said.

In the markets on Friday, it was "kind of an ugly day," a source said. "Equities took it on the chin. Credit spreads in both provincial and corporate markets are not widening as much as one would expect."

The markets were jittery over fears Greece may default over the weekend.

"Canada mortgage bonds are underperforming a little bit," a source said. "CMB spreads are up 3 to 4 basis points on the day, on the back of large selling from a couple of guys."

For example, the 2.75% Canada mortgage bonds due 2016 traded Friday at 34 bps bid, 32 bps offered after opening the day at 30 bps bid, 30.5 bps offered.

Other corporate bonds also widened on the day, including financials. Bank deposit notes were seen out about 5 bps to 7 bps late afternoon.

Government bonds rallied on a weaker jobs report and the market nervousness in Europe. Canada's 10-year note yield fell to 2.11% from 2.22%. The 30-year bond yield dropped 10 bps to 2.8%.

Ontario sells C$750 million

In a new provincial deal, Ontario (Aa1/AA-/DBRS: AA) priced an upsized C$750 million in a reopening of its 4.65% benchmark bonds due June 2, 2041 at 114.18 to yield 3.845%, a bond source said Friday.

"This was upsized due to specific investor inquiry," the source said. "It was well received, and we saw buying on the back of the issue."

The deal was upsized from the province's typical C$600 million offering in longs, the source said.

The issue priced at a spread of 92 bps over the Government of Canada benchmark. BMO Capital Markets Corp. was the lead manager.

In the secondary market, the notes firmed about 1 bp before spreads widened and the bonds traded back around issue price and were seen little changed on Friday, a source said.

The province last reopened the issue on May 18 in a sale of C$600 million of the 4.65% benchmark bonds at a spread of 84 bps over the government benchmark.

Plenary to sell C$1 billion

One new bond deal is scheduled from Plenary Health Care Partnerships Humber, which plans a roadshow for an offering of more than C$1 billion in three tranches of bonds (/A/DBRS: A), according to sources.

The deal is expected to launch after the roadshow in the upcoming week or week after, one bond source said.

According to the recent presale report by DBRS, the deal includes C$482.089 million of short-term senior bonds due Aug. 14, 2016, C$373.473 million of series A long-term senior bonds due May 31, 2039 and C$149.01 million of series B long-term senior bonds due Nov. 30, 2044.

RBC Capital Markets Corp. is the lead manager.

Plenary Health Care Partnerships is an entity created to design, build, finance and maintain a new 1.7 million square foot hospital in Toronto.

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