RioCan REIT, Canada Capital Auto Trust wrap sales; Western Energy sets price talk for deal

By Cristal Cody

Prospect News, Jan. 19 - RioCan Real Estate Investment Trust sold an upsized C$150 million of five-year debentures early Thursday, while Canada Capital Auto Receivables Asset Trust priced C$506.14 million in three tranches of senior subordinated notes near the close of the session, informed bond sources said.

A high-yield deal is expected to price on Friday in the Canadian markets from Western Energy Services Corp., which plans to sell at least C$125 million of seven-year notes, according to sources.

"They've roadshowed already and it didn't price this afternoon," one bond source said.

Corporate bonds were stronger on the day.

The Markit CDX Series 17 North American investment-grade index firmed 2 basis points to a spread of 108 bps on Thursday.

"Market tone is very supportive of new issues, demonstrated by RioCan and Canadian Capital today," a source said.

Stocks rallied and Canadian government bonds sank on Thursday pushing the 10-year note yield up 5 bps to 2%. The 30-year bond yield also rose 5 bps on the day to 2.57%.

Investors moved out of safer-haven debt after U.S. jobless claims dropped and Bank of America Merrill Lynch and Morgan Stanley posted better-than-expected earnings following a successful government bond auction in Germany on Wednesday.

Statistics Canada said on Thursday that manufacturing sales rose 2% in November to C$49.6 billion, the fourth increase in five months.

Canada Capital Auto prices

Canada Capital Auto Receivables Asset Trust, used by Ally Credit Canada Ltd. to securitize auto loans, priced C$506.14 million in three tranches of senior subordinated notes (Aaa//DBRS: AAA) late in the day, according to a source.

In the first tranche of class A1 notes, the trust sold C$183 million of 1.693% notes due July 26, 2012 at par with a semiannual yield of 1.699%, or a spread of 74.2 bps over the Government of Canada benchmark.

The trust sold C$208 million in the second tranche of 2.025% notes due Dec. 8, 2013, class A2, at par for a semiannual yield of 2.034%, or a spread of 100.1 bps over the government benchmark.

The trust also raised C$115.1 million in the class A3 tranche of 2.384% notes due June 30, 2015 at par for a semiannual yield of 2.396%, or a spread of 121.1 bps over the government benchmark.

Bank of America Merrill Lynch, BMO Capital Markets Corp., CIBC World Markets Inc. and National Bank Financial Inc. were the lead managers. Co-managers were Deutsche Bank AG, RBC Capital Markets Corp. and Scotia Capital Inc.

Proceeds will be applied by the Toronto-based trust to finance the purchase of a co-ownership interest in a portfolio of car and light-truck secured loans.

RioCan prices C$150 million

RioCan Real Estate Investment Trust sold an upsized C$150 million of 3.8% five-year senior debentures at 99.916 to yield 3.819% on Thursday, an informed bond source said.

The debentures due March 1, 2017 (DBRS: BBB) priced at a spread of 239 bps over the Government of Canada benchmark.

The deal was upsized from C$100 million.

RBC Capital Markets, TD Securities Inc. and Scotia Capital were the bookrunners.

Proceeds will be used to repay debt, for property acquisitions, to fund development and for general trust purposes.

Toronto-based RioCan REIT is Canada's largest real estate investment trust.

Western Energy sets talk

Western Energy Services set the minimum deal size and price talk on Thursday for its upcoming sale of seven-year senior notes in the high-yield market.

The C$125 million offering of notes due Jan. 27, 2019 (B3/B+/) is talked to yield in the 8% area.

The notes are non-callable for four years.

The deal is Rule 144A eligible. Pricing is expected on Friday.

RBC Capital Markets is the bookrunner. Co-managers are HSBC Capital (Canada) Inc., AltaCorp Capital Inc. and GMP Securities LP.

The company completed a roadshow earlier in the week.

Western Energy is a Calgary, Alta.-based oilfield drilling company.

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