Viterra, TD Bank, Toyota Credit, Ontario flood market; Viterra's notes firm 10-20 bps

By Cristal Cody

Prospect News, Feb. 10 - Deals flooded the Canadian bond market Thursday, including offerings from Viterra Inc., Toronto-Dominion Bank, Toyota Credit Canada Inc., Laurentian Bank of Canada and the Province of Ontario.

Baytex Energy Corp. also sold $150 million 10-year senior notes. The company's existing 9.15% notes due 2016 were seen Thursday flat at 109 bid, 110 offered, a source said.

Rumblings of new deals are expected to keep the primary active through spring.

Meanwhile, Canadian Satellite Radio Holdings Inc.'s C$150 million note offering is talked in the 9.75% yield area, sources said.

"Market tone is excellent," a source said. "When you have blowout deals, that's a pretty good day in Canada."

High-yield offerings may be slow to start, but "spring and summer will get a little bit busier," a source said.

Viterra's split-rated notes attracted widespread interest and firmed 10 basis points to 20 bps in secondary trading, a source said.

Canadian bonds were mixed on Thursday. The 10-year bond yield rose to 3.469% from 3.44%, while the two-year note yield fell to 1.875% from 1.88%.

Treasuries reversed Wednesday's gains as yields picked up again on Thursday following the last refunding of $72 billion for the week. The Treasury auctioned $16 billion of 30-year bonds at a high yield of 4.75%. The 10-year note yield rose 4 bps to 3.69%. The two-year note yield added 3 bps to end at 0.83%.

Viterra deal a 'blowout'

Viterra (Ba1/BBB-/DBRS: BBB) sold C$200 million of 6.406% senior notes due Feb. 16, 2021 at par on Thursday, sources said.

The company priced the notes at a spread of 296.9 bps over the Government of Canada benchmark.

"Viterra was a blowout," a sellside source said. "It came inside guidance; we couldn't upsize it. The order book was huge - north of 60 buyers."

The deal is Viterra's first investment-grade offering in Canada. The bonds were sold in Canada and under Rule 144A.

"Bond market yields are very attractive. We see this as another opportunity to reduce future financing risk and bolster liquidity during this rising commodity price cycle," Rex McLennan, Viterra's chief financial officer, said in a statement.

The deal has a Canada call at 72.5 bps and a change-of-control put at 101%.

TD Securities Inc. and RBC Capital Markets Corp. were the lead managers.

In the secondary market, Viterra's notes narrowed 10 bps to 20 bps, a source said.

"A lot of people were left without bonds or the size of the bonds they wanted," the source said. "That's probably why it's traded so much tighter."

The proceeds will be used to repay drawdowns on the company's global credit facility.

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

TD Bank sells notes

Toronto-Dominion Bank sold C$500 million 2.75% NHA Mortgage-Backed Securities Program notes due Jan. 1, 2016 at 98.854 to yield 3.029% on Thursday, an informed source said.

The notes priced in line with guidance at a spread of 50 bps over the Canadian bond curve.

TD Securities Inc. was the lead manager.

The pool consists of residential mortgages insured by the Canada Mortgage and Housing Corp. The mortgages were originated by Toronto-based TD Bank.

Toyota Credit Canada prices

Toyota Credit Canada (Aa2/AA/DBRS: AA) sold C$300 million of 3.55% medium-term notes due Feb. 22, 2016 at 99.891 to yield 3.574% on Thursday, an informed source said.

The notes priced at a spread of 84.3 bps over the Government of Canada benchmark.

TD Securities Inc., CIBC World Markets Inc. and RBC Capital Markets Corp. were the bookrunners.

Toyota Credit Canada is the financing arm of Toyota Motor Corp.

Baytex Energy sells notes

Baytex Energy priced a $150 million issue of 10-year senior notes (B3/B+) at par to yield 6¾% on Thursday, according to an informed source.

The yield printed at the tight end of price talk that was set in the 6 7/8% area.

RBC Capital Markets and Credit Suisse were the joint bookrunners.

The Calgary, Alta.-based oil and gas company plans to use the proceeds to repay existing debt under its revolving credit facilities and for general corporate purposes.

Ontario reopens euro notes

The Province of Ontario sold an additional £75 million of 2% series 109 euro medium-term notes due Dec. 10, 2013 at 99.428 on Thursday, a source said.

Deutsche Bank AG, RBC Capital Markets Corp. and RBS Securities Inc. were the bookrunners.

The province sold £250 million of the euro MTNs (Aa1/AA-) on Jan. 11 at 72 bps over gilts and another £50 million on Jan. 21 at 99.904 to yield 2.035%. The total outstanding is now £375 million.

Laurentian Bank prices

Laurentian Bank of Canada (/BBB+/DBRS: BBB) priced C$100 million floating-rate deposit notes due Feb. 14, 2014 at par, a source said Thursday.

The notes were sold in line with guidance at 75 bps over the three-month CDOR.

Laurentian Bank Securities, Inc. managed the sale.

Quebec-based Laurentian Bank is a banking institution with operations across Canada.

Canadian Satellite sets talk

Canadian Satellite Radio Holdings is expected to sell C$150 million of notes in the 9.75% yield area, plus or minus 1/8, an informed source said.

"We like the new combined entity and think this deal should go very well," the source said.

Shareholders of the Toronto-based XM Canada parent will vote Feb. 17 on the merger with Sirius Canada Inc.

Proceeds will be used to partially fund the all-stock merger.

OPTI crashes post-numbers

OPTI Canada Inc. bonds were the "most active bonds by far," according to a trader.

The trader said the 7 7/8% and 8¼% notes due 2014 were "going crazy" after the company announced its fourth-quarter and full-year results. The paper dropped "7 points right off the bat" but managed to regain a little ground, ending the day just 4½ points weaker.

He pegged the issues around 481/2.

Another trader said it was OPTI's "biggest day yet," with $500 million to $600 million of the company's assorted issues trading.

"A whole set of people dumped out of them and a whole new set of people got involved," the trader said.

The subordinated issues experienced "huge swings" in price, he added, seeing a low-tick in the 7 7/8% notes of 411/2. By the end of business, the bonds closed around 48 bid, 48½ offered.

The senior issues, however, "didn't budge," the trader said, and trading in those issues was light.

He quoted the 9% first-lien notes due 2012 at 99 bid, 99½ offered and the 9¾% first-lien notes due 2013 at 97½ bid, 98½ offered.

The Calgary, Alta.-based oil sands producer reported C$81 million of revenues for the fourth quarter, compared to C$43 million in the same quarter of 2009. Net loss narrowed to C$26 million, or 9 cents per share, from $212 million, or 75 cents per share, the year before.

For the fiscal year, net loss was C$274 million, versus C$306 million in 2009. Revenues were C$250 million, up from C$143 million the previous year.

As of Dec. 31, OPTI had C$363 million of cash and equivalents, including a C$190 million revolving credit facility. The company withdrew C$90 million from that facility in January.

OPTI also held a conference call on Thursday, but management refused to discuss anything but its operating results.

The company started 2010 positively, as production ramp-up was "on track," according to Chris Slubicki, president and chief executive officer. But that momentum ceased in August, resulting in less-than-anticipated production.

Back in November, OPTI had forecast production would be around 38,000 to 45,000 barrels of bitumen per day in 2011. However, operational problems have resulted in much less output.

"With the delays we have faced, achieving this forecast is a risk unless operations improve in the near term," Slubicki said.

Slubicki added that the company remained committed to reviewing its strategic options alongside its advisors, Scotia Waterous Inc., TD Securities Inc. and Lazard Freres & Co. LLC.

Paul A. Harris and Stephanie Rotondo contributed to this review

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