Scotiabank, Quebecor, Rabobank, Great-West Lifeco sell notes, preferreds; VW Credit firms

By Cristal Cody

Prospect News, Oct. 3 - Canadian issuers and a Dutch bank brought offerings in the Canadian, European and U.S. markets on Wednesday, led by a $1.35 billion sale of 0.75% three-year senior notes from the Bank of Nova Scotia, according to informed bond sources.

Quebecor Media Inc. also sold more than $1 billion of Canadian dollar and U.S. dollar tranches late in the day.

Rabobank Nederland priced an offering of C$125 million of four-year senior medium-term notes priced in London under its euro medium-term note program.

"Not a domestic deal," one source said.

Also in the market on Wednesday, Great-West Lifeco Inc. sold C$150 million of preferred stock due Dec. 31, 2017.

The remainder of the week is expected to see more debt offerings from Canadian issuers, a source said.

"We'll be busy into Friday," the source said.

No aftermarket activity was seen immediately in Bank of Nova Scotia's new notes, a trader said.

VW Credit Canada Inc.'s "hugely successful" C$400 million offering of 2.2% four-year senior notes on Tuesday traded tighter on Wednesday, a source said.

Secondary trading was mixed on the day, a bond trader said.

"Mostly things are better on the day," the trader said.

Another bond source said the Canadian markets felt "sideways today."

"With the exception of VW, which had great support, generally credit's not a lot tighter today," the source said.

The Markit CDX Series 18 North American investment-grade index firmed 2 basis points to a spread of 96 bps.

The Markit CDX Series 18 North American high-yield index climbed to 100.19 from 99.91.

Government bonds traded flat for another session across the curve. Canada's 10-year note yield closed unchanged at 1.72%. The 30-year bond yield was flat at 2.32%.

Scotiabank sells notes

The Bank of Nova Scotia was in the U.S. market on Wednesday with a $1.35 billion sale of 0.75% three-year senior notes priced at Treasuries plus 45 bps, an informed source said.

The notes (Aa1/AA-/AA-) were sold tighter than guidance in the range of 50 bps over Treasuries to 54 bps, the source said.

Pricing was at 99.997 with a yield of 0.751%. The notes are non-callable.

Bank of America Merrill Lynch, Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Scotia Capital Markets USA Inc. were the bookrunners.

Toronto-based Bank of Nova Scotia is a global financial services company.

Rabobank raises C$125 million

Rabobank Nederland (Aa2/AA/DBRS: AAA) sold C$125 million of 2.125% senior medium-term notes due Oct. 17, 2016 on Wednesday at 101.085 to yield 1.841% in the European market, an informed bond source said.

Rabobank International and TD Securities Inc. were the lead managers.

The Dutch bank is the central organization for international financial services provider Rabobank Group.

Great-West Lifeco prices

Great-West Lifeco said it priced C$150 million, or 6 million shares, in an offering on Wednesday of non-cumulative first preferred shares to yield 4.8% for the initial period ending Dec. 31, 2017.

The series R shares (DBRS: Pfd-1) priced at C$25.00 per share.

BMO Capital Markets Corp., RBC Capital Markets LLC and Scotia Capital Inc. were the lead managers.

The deal includes an over-allotment option of 2 million shares for an extra C$50 million in proceeds.

The shares are not redeemable prior to Dec. 31, 2017.

On and after Dec. 31, 2017, the company may redeem the preferreds for $26.00 in cash each if redeemed prior to Dec. 31, 2018; $25.75 per share if redeemed on or after Dec. 31, 2018 but prior to Dec. 31, 2019; $25.50 per share if redeemed on or after Dec. 31, 2019 but prior to Dec. 31, 2020; $25.25 per share if redeemed on or after Dec. 31, 2020 but prior to Dec. 31, 2021; and $25.00 per share if redeemed on or after Dec. 31, 2021.

Proceeds from the offering will be used for general corporate purposes and to supplement the company's liquidity position.

Winnipeg, Man.-based Great-West Lifeco operates life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses.

VW Credit Canada firms

In the secondary market, VW Credit Canada's 2.2% senior notes due Oct. 11, 2016 traded in the low 90 bps area on Wednesday, a bond source said.

VW Credit Canada (A3//DBRS: A) sold C$400 million of the notes at a spread of 98.7 bps over the Government of Canada benchmark on Tuesday.

The financial services provider for Volkswagen Group Canada dealerships is based in Quebec.

Andrea Heisinger contributed to this review

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