Capital Desjardins, Newalta, Valeant Pharmaceuticals lift high-grade, junk bond markets

By Cristal Cody

Prospect News, Nov. 18 - The Canadian bond markets were active on Thursday with new high-grade and high-yield debt from Capital Desjardins Inc., CNH Capital Canada Receivables Trust, Newalta Corp. and Valeant Pharmaceuticals International, sources said.

In the investment-grade market, Capital Desjardins sold C$700 million of 3.797% series H senior notes due Nov. 23, 2020 at par to yield 142.6 basis points over the Government of Canada benchmark bond due 2015 on Thursday, a source said.

The deal was upsized from a minimum of C$500 million.

The notes are callable in 2015.

Desjardins Securities International Inc. was the lead manager of the sale.

Montreal-based Capital Desjardins is a subsidiary of the cooperative member-owned financial institution Federation des caisses Desjardins du Quebec.

The Canadian market tone was positive on expectations of an Irish bank bailout. Ireland finance minister Brian Lenihan said the government is prepared to accept an aid package for Irish banks.

In economic data, Statistics Canada reported that in September foreign investors bought C$12.25 billion of Canadian securities, including C$8.8 billion of Canadian bonds.

Government bonds were mixed in trading on Thursday. Canada's 10-year note yield fell to 3.123% from 3.14%. The two-year note yield rose to 1.635% from 1.61%.

U.S. Treasuries turned lower. The yield on the 10-year Treasury note rose 1 basis point to 2.89%. The two-year note yield rose 2 bps to 0.5%.

On Thursday, the Federal Reserve Bank of New York bought $7.228 billion of notes due 2013 through 2014 as part of its $600 billion quantitative easing program to boost the economy. The Fed also is scheduled to buy long-term Treasuries on Friday.

CNH Capital sells ABS

CNH Capital Canada Receivables Trust priced C$363.77 million of asset-backed securities on Thursday, according to a source.

The sale included C$168.79 million of class A1 1.831% notes (Aaa/AAA/) due June 17, 2013 at par to yield 65 bps over the Canada benchmark.

The issuer also priced C$186.25 million of class A2 2.598% notes (Aaa/AAA/) due May 16, 2016 at par to yield 85 bps over the Canada benchmark.

CNH Capital Canada sold C$8.73 million of class B 4.022% notes (A2/A/) due May 15, 2017 at par to yield 190 bps over the Canada benchmark.

Bookrunners were RBC Capital Markets Corp., BMO Nesbitt Burns Inc. and TD Securities Inc.

Toronto-based CNH Capital Canada Receivables Trust acquires retail installment and finance lease contracts in Canada from CNH Capital Canada, Ltd. that are financed by issuing asset-backed notes and loans and subordinated loans.

Valeant upsizes to $1 billion

In the high-yield market, Valeant Pharmaceuticals International upsized and restructured its quick-to-market high-yield bond deal on Thursday.

The Mississauga, Ont.-based specialty pharmaceutical company priced a $1 billion tranche of 6 7/8% eight-year senior notes (existing ratings B1/BB-) at 99.24 to yield 7%.

The yield printed on top of price talk.

A proposed 10.5-year tranche was withdrawn.

Goldman Sachs & Co. ran the books.

Proceeds will be used to repay the term loan, as well as for general corporate purposes, including acquisitions, debt repayment and share repurchases.

Newalta finds good demand

Also on Thursday, Newalta sold C$125 million of 7.625% senior unsecured notes (B1/BB/) due Nov. 23, 2017 at par to yield 496.9 bps over the Government of Canada benchmark bond.

"We are pleased with the positive response we've received for the offering," Mike Borys, Newalta's chief financial officer, said in a statement. "The successful completion of this refinancing will strengthen the balance sheet, achieve better alignment with our long-term assets, and provide increased financial flexibility to meet the demand of future growth and development initiatives."

CIBC World Markets Inc. was the bookrunner.

Proceeds will be used to reduce senior debt under Newalta's credit facility and for general corporate purposes.

A source said the notes "should trade up on the secondary demand from retail [investors] who know the name."

Newalta is a Calgary, Alta.-based industrial waste management and environmental services company.

Paul A. Harris contributed to this report

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