Videotron, Manitoba tap U.S. bond markets; IBM, BP maple bonds firm; Kinross Gold flat

By Cristal Cody

Prospect News, Feb. 29 - Canadian issuers took to the U.S. markets on Wednesday with two offerings in the investment-grade and high-yield space.

Videotron Ltd. sold an upsized $800 million of 10-year senior notes on Wednesday, while the Province of Manitoba priced $600 million of five-year global debentures.

Caisse Centrale Desjardins du Quebec also tapped the U.S. market late Tuesday for $1.5 billion of five-year covered bonds.

Primary activity in Canada stayed quiet, a day after the third maple bond offering of the year, this time from Transurban Finance Co. Pty Ltd. of Australia.

Australian issuers are expected to be back in the Canadian market this year with more maple bond deals, a source said.

"I suspect there will be one or two non-financial maples from Australia," the source said.

Transurban Finance, the financing arm of Melbourne-based toll road operator Transurban Group, sold C$250 million of 3.368% seven-year medium-term notes (Baa1/A-/) at par on Tuesday.

"Don't think it will trade," a source said. "It went into strong buy-and-hold clients."

International Business Machines Corp.'s maple bond offering sold earlier in February has "improved nicely," though it does not trade much, one source said.

BP Capital Markets plc's five-year maple bonds are trading tighter.

Videotron's new notes were not seen initially in the U.S. secondary market on Wednesday. The company's older 9 1/8% notes due 2018 traded better at 111 bid, 111.5 offered, a trader said.

Videotron sold the notes in a $260 million offering on Feb. 26, 2009 at 98.625 to yield 9.35%.

Bonds were mostly flat over the day. The Markit CDX Series 17 North American high-grade index ended unchanged Wednesday at a spread of 94 basis points.

No changes were seen in Canadian gold miner Kinross Gold Corp.'s bonds, traders said.

Gold prices tumbled 3% on the day after Federal Reserve chairman Ben Bernanke's testimony before the U.S. House of Representatives on Wednesday did not hint of more quantitative easing plans to stimulate the economy.

Canadian government bonds moved lower on the shorter end. The two-year note yield was up 3 bps to 1.09%. The 10-year note yield rose 1 bp to 1.98%.

Manitoba sells five-years

The Province of Manitoba priced $600 million of 1.3% five-year global debentures on Wednesday to yield mid-swaps plus 19 bps, or Treasuries plus 46.1 bps, a source away from the trade said.

The securities priced at a level tighter than talk in the mid-swaps plus 20 bps area.

The notes (Aa1/AA/) were priced at 99.799 to yield 1.341%. The paper is non-callable.

Bookrunners were CIBC World Markets Corp., HSBC Securities (USA) Inc., National Bank Financial and RBC Capital Markets LLC.

BMO Capital Markets Corp., Casgrain & Co. USA Ltd., Scotia Capital USA Inc. and TD Securities USA LLC were the co-managers.

Proceeds are being used for general government programs.

Videotron upsizes

Videotron sold a massively upsized $800 million issue of non-callable 10-year senior notes (Ba1/BB/) at par to yield 5% on Wednesday, according to a syndicate source.

The yield printed at the tight end of the 5% to 5¼% price talk.

Bank of America Merrill Lynch, RBC Capital Markets LLC, Scotia Capital (USA) Inc. and Citigroup Global Markets Inc. were the joint bookrunners for the quick-to-market issue, which was upsized from $500 million.

The Montreal-based cable operator plans to use the proceeds to repurchase 6 7/8% senior notes due 2014 and repay its revolver.

Caisse Centrale prices

Caisse Centrale Desjardins du Quebec sold $1.5 billion of 1.6% five-year covered bonds (Aaa/AAA/) late on Tuesday at a spread of Treasuries plus 77.2 bps, a source close to the trade said.

Full terms were not available at press time.

Bookrunners were Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and RBS Securities Inc.

The deal was done under Rule 144A and Regulation S.

The treasury arm of the Desjardins Group is based in Montreal.

IBM trades better

In the secondary market, Canada's second maple bond offering from IBM has "gotten better; it's in a good solid 5 bps from where it issued," a bond source said.

IBM (Aa3/A+A+) priced C$500 million of 2.2% notes due Feb. 10, 2017 at a spread of 85.5 bps over the Government of Canada benchmark on Feb. 3.

The notes were seen trading on Wednesday at 82 bps bid, off the Canadian bond curve.

The technology products and services provider is based in Armonk, N.Y.

BP Capital Markets firms

The 2.774% five-year notes that BP Capital Markets (A2/A/) that priced on Feb. 16 is trading tighter in the 123 bps bid area, a source said.

"It's traded as tight as 122," the source said.

BP Capital Markets sold C$500 million of the notes at a spread of 130 bps over the Canadian bond curve.

BP Capital Markets is a funding arm of the energy company.

Kinross Gold flat

Bonds from Kinross Gold (Baa3/BBB-/BBB-) traded unchanged on the day in the U.S. secondary market, sources said.

The 5.125% notes due 2021 were quoted at 316 bps. Kinross sold $500 million of the notes at a spread of 290 bps on Aug. 15.

Kinross Gold's 6.875% bonds due 2041 traded flat at 346 bps.

Kinross sold the tranche on Aug. 15 in a $250 million offering at a spread of 315 bps plus Treasuries.

The mining and gold ore processing company is based in Toronto.

Andrea Heisinger and Paul A. Harris contributed to this review

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