Toronto-Dominion Bank sells $2.5 billion; Trader upsizes to $290 million; provincials slow

By Cristal Cody

Prospect News, July 20 - Canadian issuers took to the U.S. bond markets on Wednesday with a two-year high-grade floating-rate note sale from Toronto-Dominion Bank and a high-yield deal from Trader Corp.

Toronto-Dominion Bank sold $2.5 billion of two-year senior floating-rate medium-term notes, while Trader priced an upsized $290 million of 9 7/8% seven-year senior secured notes (B3/B) on Wednesday, according to an informed source.

Meanwhile in Canada, one roadshow started on Wednesday for Kruger Products LP's offering of C$150 million seven-year senior notes (expected ratings /B/DBRS: BB).

Canada's provincial bond market has seen a slowdown in new issuance over the week.

"It's been dead this week," one provincial bond source said. "It's part tone - people want to do some issuance but we don't have the best tone in the market, so issuers are waiting for it to improve."

Provincial bond spreads have tightened about 1 basis point since the start of the week.

"Bond spreads are tighter since we have not had supply," the source said.

In secondary trading, the Province of Ontario's benchmark 4% 10-year notes traded at 102.61, a bond market source said. The province (Aa1/AA-/DBRS: AA) reopened the notes on July 12 in a C750 million add-on priced at 102.629 to yield 3.68%.

On the corporate side, big news caused OPTI Canada Inc.'s bonds to gain as much as 12 points on the day. The bonds jumped in heavy trading after Cnooc Ltd. made a bid for the troubled oil-sands producer.

Canada's government bonds ended the day flat to slightly weaker, with the 10-year note yield unchanged at 2.94%. The 30-year bond yield rose 1 bp to 3.39%.

In economic news, Statistics Canada said wholesale sales rose 1.9% to C$47.6 billion in May, following a 0.1% drop in April.

TD Bank taps market

Toronto-Dominion Bank priced $2.5 billion of two-year floaters on Wednesday at par to yield three-month Libor plus 18 bps, a market source away from the sale said.

The floaters were priced in line with talk in the Libor plus 18 bps area.

The notes (Aaa/AA-) are non-callable.

Bookrunners were TD Securities (USA) LLC and Goldman Sachs & Co.

Proceeds will be added to the company's general funds and used for general corporate purposes.

TD Bank made its debut in the U.S. debt market on July 7 when it sold $2.5 billion of notes in three parts.

The bank and financial services company is based in Toronto.

Trader sells $290 million

Trader priced an upsized $290 million issue of 9 7/8% seven-year senior secured notes (B3/B) at 99.367 to yield 10% on Wednesday, according to an informed source.

The yield printed on top of the price talk.

The issue was upsized from $275 million.

The notes become callable on Aug. 1, 2014 at par plus 75% of the coupon, or 107.406. A special call provision that would have allowed the issuer to redeem 10% of the notes annually at 103 during the non-call period has been removed.

RBC Capital Markets was the bookrunner.

Proceeds will be used to fund the acquisition of Trader by Apax Partners.

Etobicoke, Ont.-based Trader is a print and online media publisher in the automotive, real estate, merchandise and employment sectors.

OPTI jumps on Cnooc bid

OPTI Canada's subordinated issued popped 10 to 12 points, according to traders, on news China's largest offshore-oil producer - Cnooc - had made an offer to buy the oil-sands producer.

"All of those were up," a trader said. "There was tons of trading."

He said there was "heavy buying" in the 7 7/8% and 8¼% notes due 2014. Both issues closed around 65, which he said was up 10 to 12 points.

At another desk, the notes were quoted at 64½ bid, 65¼ offered, up 11 to 12 points, depending on the issue.

Cnooc's bid for bankrupt OPTI was valued at about $2.1 billion and came exactly a week after OPTI filed for creditor protections in Canada.

Under the terms of the deal, Cnooc would pay about $34 million for all of OPTI's outstanding common stock and would take on more than $2 billion of debt.

"We are very pleased with this transaction and believe it is in OPTI's best interest," said Chris Slubicki, president and chief executive of OPTI, in a statement. "Cnooc Ltd. is a technically experienced and well-capitalized company that is equipped to support further development at Long Lake and future expansions in the Canadian oil sands."

"The transaction strengthens our Canadian presence in the oil-sands business," added Yang Hua, chief executive of Cnooc. "We believe that upside potential of the assets will facilitate local energy supply and our production growth in the long term."

OPTI's board of directors has already unanimously approved the sale.

OPTI trading briskly

A trader saw "a gazillion" dollars worth of OPTI Canada bonds trading on the news that the troubled oil-sands exploration company may be acquired by Cnooc for $2.1 billion.

Another trader called it "the hot name of the day and pegged the 8¼% notes at 65 bid, up 11 points, with more than $165 million of the bonds traded. The trader saw the 7 7/8% notes due 2014 up 12 points on the day at that same 65 level, with $67 million traded.

The first trader, noting that the bonds had recently been on the rise from their lows in the 40s less than a month ago, said "God help people who were short - very painful."

He said that with little else going on in the distressed-debt precincts, "OPTI kept a lot of people very busy today, as it whooshed up."

OPTI Canada is based in Calgary, Alta.

Nortel unchanged

A trader said that Nortel Networks Corp. - whose bonds rose solidly on Tuesday on the news that Canadian regulators will not challenge the bankrupt communications technology company's $4.5 billion sale of its valuable portfolio of high-tech patents - were at 113 bid, 113½ offered, which he called unchanged on the session, in "some trading."

Catalyst flat

A trader said that he "did not even see Catalyst Paper Corp.'s bonds Wednesday, leaving them unchanged at 57-58 for its 7 3/8% notes due 2014 and at 80-82 for its 11% secured notes due 2016.

Sector peer NewPage Corp.'s 11 3/8% secured first-lien notes due 2014 saw "some trading" around a 90-92 context, while its 10% second-lien bonds due 2012 stayed at 20 bid, 22 offered.

"I wouldn't say there was much activity," he declared.

Andrea Heisinger, Paul Deckelman, Paul A. Harris and Stephanie N. Rotondo contributed to this review

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