Ontario, Quebec, Windsor Canada Utilities, Fortis tap bond, preferred markets; paper flat

By Cristal Cody

Prospect News, Nov. 1 - The Canadian bond and preferred markets saw new issuance on Thursday with deals from the provinces of Quebec and Ontario, a 30-year debenture offering from Windsor Canada Utilities Ltd. and an upsized sale of preferred shares from Fortis Inc.

The Province of Quebec sold C$500 million in a reopening of its 3.5% 10-year medium-term notes, while the Province of Ontario priced C$500 million in a new benchmark issue of 2.85% bonds due June 2, 2023, informed sources said.

"I get the feeling it went well," one syndicate source said.

After a roadshow in Canada earlier in the week, Windsor Canada Utilities launched and priced its offering of C$103 million of 30-year senior debentures in a private placement on Thursday.

"Definitely was a good day today," a Canadian bond source said.

Early on Thursday, Fortis announced it sold C$150 million of cumulative redeemable first preference shares and later in the day upsized the sale to C$200 million.

The company also reported on Thursday third-quarter earnings of C$45 million, or 24 cents a share, compared to C$56 million, or 30 cents per share, in the same period a year ago.

Corporate bonds traded flat to tighter on the day.

The Markit CDX Series 18 North American investment-grade index firmed 3 basis points to a spread of 96 bps.

The Markit CDX Series 18 North American high-yield index edged up to 99.75 from 99.22.

Kinross Gold Corp.'s 5.125% senior notes due 2021 traded flat at 284 bps over Treasuries in the U.S. market, a source said.

The Toronto-based mining and gold ore processing company sold $500 million of the notes (Baa3/BBB-/) at a spread of 290 bps over Treasuries on Aug. 15, 2011.

Government bonds ended flat to weaker. Canada's two-year note yield rose 1 bp to 1.08%. The 10-year note yield was unchanged at 1.79%.

In economic data, Canadian manufacturing growth slowed for the fourth consecutive month, according to the RBC Purchasing Managers Index, which fell to 51.4 in October from 52.4 in September.

Ontario sells C$500 million

The Province of Ontario (Aa2/AA-/DBRS: AA) sold C$500 million in the new benchmark issue of 2.85% bonds due June 2, 2023 at 99.736 to yield 2.879%, according to an informed source.

The bonds priced at a spread of 97.5 bps over the Government of Canada benchmark.

CIBC World Markets Inc. was the lead manager.

The notes are non-callable.

Quebec reopens 10-year notes

In the other provincial offering on Thursday, the Province of Quebec (Aa2/A+/DBRS: A) sold C$500 million in a reopening of its 3.5% 10-year medium-term notes at 105.089 to yield 2.913%, an informed bond source said.

The notes due Dec. 1, 2022 priced at a spread of 111.5 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the lead manager.

The notes are non-callable.

The province last tapped the issue on Sept. 20 with a C$500 million add-on that priced at 105.155 to yield 2.911%, or 106.5 bps over the Government of Canada benchmark.

Windsor Canada prices

Windsor Canada Utilities (/A/) sold C$103 million of 4.134% 30-year senior debentures at par in a private placement on Thursday, an informed source said.

The debentures due Nov. 6, 2042 priced at a spread of 175 bps over the Government of Canada benchmark.

BMO Capital Markets Corp. was the bookrunner.

The notes may be redeemed at the Canada bond yield plus 43.5 bps.

Windsor, Ont.-based Windsor Canada Utilities provides operations and management services to subsidiary EnWin Utilities Ltd.

Fortis upsizes

Fortis announced on Thursday that it sold an upsized C$200 million of cumulative redeemable first preference shares that yield a 4.75% annual dividend.

The company sold 8 million shares of the series J preferred stock (DBRS: Pfd-2) at C$25.00 per share.

The deal was upsized from C$150 million, or 6 million shares.

BMO Capital Markets and RBC Capital Markets LLC were the lead managers.

The shares are not redeemable prior to Dec. 1, 2017.

On or after Dec. 1, 2017, the company may redeem the shares in whole or in part for C$26.00 per share if redeemed before Dec. 1, 2018; C$25.75 per share if redeemed on or after Dec. 1, 2018 but before Dec. 1, 2019; C$25.50 if redeemed on or after Dec. 1, 2019 but before Dec. 1, 2020; C$25.25 if redeemed on or after Dec. 1, 2020 but prior to Dec. 1, 2021; and C$25.00 per share if redeemed on or after Dec. 1, 2021.

Proceeds from the offering will be used to repay debt under the company's C$1 billion committed corporate credit facility and for other general corporate purposes.

St. John's, Newfoundland and Labrador-based Fortis is an investor-owned gas and electric utility.

Brookfield details offering

Brookfield Renewable Energy Partners LP on Thursday said the previously announced C$175 million offering of senior secured bonds due Dec. 31, 2053 from subsidiary Brookfield Renewable Kwagis Holding Inc. priced with a 4.452% coupon in a private placement in Canada.

The series 2012- 1 bonds (DBRS: A) are fully amortizing over the 41-year term.

Scotia Capital Inc. was the bookrunner.

The bonds are guaranteed by subsidiary Kwagis Power LP and secured by all assets of Project Co., which is an entity created to own, develop, construct and operate a 45-megawatt hydroelectric power generating facility on the Kokish River in British Columbia.

Proceeds from the offering will be used to help fund the C$208 million project costs.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.