Canada Housing sells C$5.25 billion; Ontario reopens bonds due 2043; Athabasca drops

By Cristal Cody

Prospect News, Nov. 16 - Canada Housing Trust No. 1 sold an upsized C$5.25 billion of bonds and the Province of Ontario raised C$200 million in a reopening of its long bonds in the Canadian markets on Friday.

Canada Housing Trust sold two tranches of mortgage bonds that included fixed-rate bonds and floating-rate notes, an informed source said.

The sale of the floating-rate notes was upsized to C$3 billion, and the notes "tightened in a little bit" compared to guidance, a source said.

The Province of Ontario reopened its 3.5% bonds due 2043 earlier in the day.

"It slipped in there after the CMBs came," a source said.

Thompson Creek Metals Co. Inc. priced its U.S. dollar $350 million issue of five-year senior secured first-priority notes on Friday.

But Eldorado Gold Corp. announced that it withdrew its proposed U.S. dollar $500 million offering of eight-year senior notes due to market conditions, a day after Bombardier Inc. said it would postpone a $1 billion offering of senior notes.

High-yield markets saw a "bit of weakness," a bond source said. "There's been a few deals pulled. Everything's lower with the equity markets. Things are just a bit weaker, off half a point."

Bonds in the Canadian mining sector on the whole are weak with new issues from New Gold Inc. and Iamgold Corp. lower in secondary trading.

Taseko Mines Ltd. filed a C$500 million preliminary short form base shelf prospectus on Thursday to offer common shares, warrants, subscription receipts, units and debt securities.

"A lot of mining companies have come - there's been a lot of paper," a source said.

Athabasca Oil Corp.'s 7½% senior secured second-lien notes due 2017 are "down a lot" in secondary trading from where the high-yield deal priced a week ago, a trader said on Friday.

The notes were seen at 90 bid, 10 points lower than the issue price.

"They're very much for sale," the trader said.

Bonds from Connacher Oil & Gas Ltd. are "down 6 points since they released earnings" on Wednesday, a trader said. Connacher reported a third-quarter earnings loss of 3 Canadian cents a share, compared to a gain of 1 Canadian cent a share in the same period a year ago.

Corporate bonds ended the day flat to slightly better. The Markit CDX Series 18 North American investment-grade index firmed 1 basis point to a spread of 110 bps.

The Markit CDX Series 18 North American high-yield index rose to 97.31 from 97.00.

Statistics Canada said in a report on Friday that foreign investors acquired C$10.6 billion of Canadian debt securities in September, the largest investment since May.

Canadian maple bond investment rose to C$1.7 billion in September, the largest outflow since October 2007, the agency said.

Government bonds ended higher. Canada's 10-year note yield fell 2 bps to 1.70%. The 30-year bond yield dropped to 2.29% from 2.31%.

Canada Housing prices

Canada Housing Trust (Aaa/AAA/DBRS: AAA) raised C$5.25 billion in its offering of mortgage bonds, an informed source said.

In the first tranche, the trust sold C$2.25 billion in a reopening of the series 48 2.4% notes due Dec. 15, 2022 at 101.127 to yield 2.274%, or a spread of 57 bps over the Government of Canada benchmark.

The trust first priced the issue on Aug. 15 in a C$2.25 billion offering at 99.603 to yield 2.444%, or a spread of 56 bps over the Government of Canada benchmark. The total outstanding is C$4.5 billion.

The trust also sold an upsized C$3 billion of series 50 floating-rate notes due March 15, 2018 at par to yield three-month CDOR plus 5.5 bps, tighter than guidance of three-month CDOR plus 6 bps to 7 bps area. The deal was upsized from C$1 billion.

National Bank Financial Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc. and TD Securities Inc. were the lead managers.

The trust is a unit of Canada Mortgage and Housing Corp., which provides financing, mortgage loan insurance, mortgage-backed securities and housing policy and programs.

Ontario retaps long bonds

The Province of Ontario (Aa2/AA-/DBRS: AA) also tapped the markets on Friday with a C$200 million reopening of its 3.5% bonds due 2043.

The bonds due June 2, 2043 priced at 102.447 to yield 3.371%, or a spread of 107 bps over the Government of Canada benchmark.

Merrill Lynch Canada Inc. was the lead manager.

The province most recently reopened the issue on Nov. 8 with a C$600 million offering priced at 102.062 to yield 3.391%, or a spread of 104 bps over the Government of Canada benchmark.

The bonds originally were issued on Jan. 26, 2012 in a C$600 million offering at 99.187 to yield 3.543%, or 88 bps over the Government of Canada benchmark.

The total outstanding is C$6.65 billion.

Thompson Creek prices

Thompson Creek Metals priced a restructured $350 million issue of 9¾% five-year senior secured first-priority notes (B1/B/) at 99.076 to yield 10% on Friday, according to an informed source.

The yield printed at the wide end of the 9¾% to 10% yield talk. The reoffer price came in line with discount talk of about 1 point.

The maturity of the notes was decreased to five years from 5.25 years. Call protection was increased to three years from 2.25 years, and the first call premium was decreased to par plus 50% of the coupon from 75% of the coupon. In addition, the 35% equity clawback coverage is extended to three years from 2.25 years.

The deal also underwent covenant changes.

Deutsche Bank Securities Inc. ran the books.

The diversified North American mining company plans to use the proceeds to replace and terminate its existing revolver, to fully fund the remainder of the capital expenditures at the Mt. Milligan copper and gold mine and for general corporate purposes.

Thompson Creek Metals is based in Vancouver, B.C., and Littleton, Colo.

Eldorado Gold withdraws offer

Eldorado Gold announced in a Friday press release that it withdrew its proposed $500 million offering of eight-year senior notes (Ba3/BB) due to market conditions.

"Deteriorating conditions in the debt capital markets led us to conclude that the proposed offering of senior notes would not be in the best interest of shareholders under the terms currently available," stated Paul Wright, the company's chief executive officer.

"We had hoped to opportunistically access the debt capital markets to augment our already strong balance sheet, but we will only do so in a disciplined manner."

No official price talk was heard on the deal. However during the course of a roadshow which began on Tuesday the deal had been discussed in a yield context of 6½% to 6¾%, according to a buyside source.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and Bank of America Merrill Lynch were the joint bookrunners.

The Vancouver, B.C.-based gold producer had planned to use the proceeds to fund mine development, to repay its revolver and for general corporate purposes.

New Gold erases gains

New Gold priced a $500 million issue of senior notes due Nov. 15, 2022 (B2/BB-) at par to yield 6¼% on Nov. 8.

The notes had climbed to 101 bid but traded down on Friday to par bid in the secondary market, a trader said.

The Vancouver, B.C.-based gold producer plans to use the proceeds for general corporate purposes.

Iamgold down

Iamgold's 6¾% senior notes due Oct. 1, 2020 have traded down a couple points since the issue priced in September, going out on Friday at 97.5 bid, 98 offered, a bond source said.

The company sold a U.S. dollar offering of $650 million of the notes (B1/BB-/) at par to yield 6¾% on Sept. 14.

The gold mining company is based in Toronto.

Athabasca Oil down

Athabasca Oil's 7½% senior secured second-lien notes due 2017 are trading lower at 90 bid in secondary trading, according to a trader.

The company sold C$550 million of the five-year notes (/B/DBRS: B) at par to yield 7½% on Nov. 9.

"The deal was too big, and the coupon was too low," the trader said.

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

Connacher moves lower

Connacher Oil & Gas' 8¾% senior notes due 2018 (Caa2/BB-/) traded 6 points lower at 73 bid on Friday, a trader said.

The company sold C$350 million of the notes on May 20, 2011 at par.

The integrated oil company is based in Calgary, Alta.

Paul A. Harris contributed to this review

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