Ontario, Montreal sell C$975 million of bonds; BAA plans to hold roadshow; AltaGas firms

By Cristal Cody

Prospect News, April 11 - Two provincial issuers priced deals in the Canadian bond market on Wednesday as corporate issuers took a break after a handful of bond sales the previous day, sources said.

The Province of Ontario sold C$600 million in an add-on to its 3.5% bonds due June 2, 2043, while Ville de Montreal sold C$375 million of debentures in two tranches on Wednesday.

"Very quiet in the corporate market today," a syndicate source said.

The corporate bond markets saw light activity on Wednesday. On Tuesday, Royal Bank Of Canada sold C$1.5 billion of five-year deposit notes, Brookfield Office Properties Inc. priced C$150 million of six-year senior notes and AltaGas Ltd. raised C$200 million of 4.07% eight-year medium-term notes.

The deal from Calgary, Alta.-based energy company AltaGas (/BBB/DBRS: BBB) was "very hot," a bond source said. "We saw a lot of investors participating. That deal traded and closed a couple [basis points] tighter and it's holding in there today."

Coming up, a new bond offering may be offered from London-based BAA Airports Ltd., which owns Heathrow Airport and plans to hold an investor roadshow in Canada in the week ahead.

Corporate bonds traded tighter overall on the day. The Markit CDX Series 18 North American investment-grade index firmed 2 bps to a spread of 102 bps.

Government bonds ended weaker. Canada's 10-year note yield rose 3 bps to 2.02%. The 30-year bond yield climbed to 2.59% from 2.56%.

Ontario reopens long bonds

The Province of Ontario (Aa1/AA-/DBRS: AA) sold C$600 million in an add-on to its 3.5% bonds due June 2, 2043 at 98.30 to yield 3.591% on Wednesday, a bond source said.

The bonds priced at a spread of 100.5 bps over the Government of Canada benchmark.

TD Securities Inc. and RBC Capital Markets Corp. were the lead managers. Co-managers were Scotia Capital Inc., CIBC World Markets Inc., BMO Capital Markets Corp. and Merrill Lynch Canada Inc.

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

The issue was last reopened on March 7 in a C$900 million offering at 99.057 to yield 3.55%, or a spread of 98.5 bps.

The total outstanding now is C$2.7 billion.

Montreal prices debentures

Ville de Montreal (Aa2/A+/DBRS: A) sold C$375 million of debentures in two tranches on Wednesday, according to a bond source.

In the first tranche, the city sold C$210 million in a reopening of 4.5% debentures due Dec. 1, 2021 at 107.47 to yield 3.574%, or a spread of 155.6 bps over the Canadian benchmark.

Montreal originally priced the issue on March 9, 2011 in a C$350 million offering at 99.306 to yield 4.582%, or 108 bps over the Government of Canada benchmark. The total outstanding now is C$560 million.

Montreal also sold C$165 million of 4.25% debentures due Dec. 1, 2032 at 100.654 to yield 4.202%, or a spread of 175 bps over the benchmark, on Wednesday.

The syndicate included National Bank Financial Inc., Desjardins Securities Inc., CIBC World Markets Inc., RBC Capital Markets Corp., Laurentian Bank Securities, Inc., Scotia Capital Inc., BMO Capital Markets Corp., Casgrain & Co. Ltd. and TD Securities Inc.

BAA Airports plans roadshow

BAA Airports plans to hold an investor roadshow in Canada in the week ahead, an informed bond source said on Wednesday.

The company is expected to stop in Toronto on Monday and Montreal on Tuesday.

Bank of America Merrill Lynch, CIBC World Markets and RBC Capital Markets are hosting the roadshow.

"A capital markets transaction may follow, subject to market conditions," a source said.

In addition to Heathrow Airport, London-based BAA also owns Stansted, Glasgow and Edinburgh airports.

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