Transpower upsizes; Canada Housing to sell mortgage bonds; Viterra, Perpetual Energy flat

By Cristal Cody

Prospect News, March 13 - Infrequent issuer Transpower New Zealand Ltd. unit Transpower Finance Ltd. came late Tuesday afternoon with a private placement of C$250 million of five-year notes in Canada following a roadshow the previous week.

"The spread was almost 70 [basis points] back of Hydro One, so it seems relatively cheap," a source said. "It was talked about 25 to 40 [bps] back last week, so a few lead orders demanded a higher spread."

Coming up on Wednesday, Canada Housing Trust (Aaa/AAA/DBRS: AAA) plans to bring C$5 billion to C$6 billion of new five-year Canada Mortgage Bonds.

The Canadian bond markets were "relatively quiet" for the most part on Tuesday given the March school break for provinces, a source said.

"It's March break so volumes are quite light," another source said of Canadian trading.

The Markit CDX Series 17 North American high-grade index firmed 3 bps to a spread of 92 bps on Tuesday.

"There's been modest trading activity," a source said. "Spreads are generally better bid and probably 1 to 2 [bps] tighter. The Fed was pretty hawkish, so there was a rally in risk products. Spreads are closing 3 to 4 bps tighter in corporate [bonds]."

Domtar Corp.'s notes (Baa3/BBB-/) priced in the U.S. market last week are trading nearly 20 bps tighter on the offer side in the secondary market, a trader said on Tuesday.

Viterra Inc.'s stock continued to trade higher on Tuesday while the bonds were little changed from Monday, a source said.

"Doesn't look like there's been a lot of movement in the price from yesterday," the source said.

Viterra's stock soared and bonds traded higher on Monday on news that several companies had expressed an interest in acquiring the Canadian grain operation.

Perpetual Energy Inc.'s 8¾% high-yield notes due 2018 are trading mostly unchanged after the company reported fourth-quarter results and lower revenue on Monday.

Provincial bonds traded about ½ bp to 1 bp tighter on the day.

The fiscal year for provinces ends on March 31, and few bond deals are expected in the sector over the month.

"We expect to be light on issuance for the next two to three weeks," a provincial syndicate source said.

Government bonds saw losses on the day as yields climbed 3 bps to 7 bps across the curve. Canada's 10-year note yield rose 7 bps to 2.07%. The 30-year bond yield rose 5 bps to 2.63%.

Transpower Finance upsizes

In a Canadian private placement deal, Transpower Finance (A1/AA-/) sold C$250 million of 3% senior notes due March 20, 2017 on Tuesday, according to the company and bond sources.

The deal was upsized from C$200 million and launched at a spread of 145 bps over the Canadian bond curve.

Additional pricing terms were not available by press time.

Scotia Capital Inc. was the bookrunner.

Proceeds were swapped back into New Zealand dollars and will be used for general corporate purposes, including the capital expenditure requirements of the Transpower Group.

Transpower is a state-owned utility that supplies power to New Zealand towns and cities.

Canada Housing on tap

The market plans for an offering of Canada Mortgage Bonds on Wednesday. Canada Housing Trust (Aaa/AAA/DBRS: AAA) is expected to price C$5 billion to C$6 billion of bonds due June 15, 2017.

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.

Domtar notes firm

The new 4.4% senior notes due 2022 that Domtar sold in the U.S. market traded on Tuesday at 226 bps offered over Treasuries, a trader said.

The company sold $300 million of the 10-year notes at Treasuries plus 245 bps on March 7.

Domtar is a paper products maker based in Montreal.

Viterra unchanged

In Canada's secondary market, Viterra's 6.406% notes due 2021 traded going out Tuesday at 110 bid, 111 offered, flat from trading C$2 higher on Monday at 110 bid.

"No real change today," the source said.

The bonds priced on Feb. 10, 2011 at par.

The company's other outstanding bonds, 8½% notes due 2014 and 8½% notes due 2017, have not moved much in trading on the potential buyout news because the bonds are "callable this summer," the source said. The two- and five-year notes have call dates in July and August, respectively.

Regina, Sask.-based Viterra provides agricultural ingredients to global food manufacturers.

Perpetual Energy flat

In other trading, Perpetual Energy's 8¾% high-yield notes due 2018 were seen on Tuesday at 86 bid, a source said.

In late February, the notes were quoted at 85.25 bid.

Perpetual Energy sold C$150 million of the notes on March 10, 2011 at par.

The oil and gas company is based in Calgary, Alta.

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