CIBC in market; Canadian Utilities sells preferreds, plans bonds; eyes on Ford offering

By Cristal Cody

Prospect News, Sept. 13 - Canadian Imperial Bank of Commerce sold $2 billion of 0.9% three-year covered bonds on Tuesday in the U.S. market, a market source said.

In Canada, Canadian Utilities Ltd. announced that it sold an upsized C$275 million of preferred stock and also plans to establish a bond program for the next two-plus years.

Coming up, "more marketing" on Wednesday is expected for the asset-backed note offering from Ford Credit Canada Ltd., which expects to raise C$534.61 million in six tranches, a source said Tuesday.

Corporate bond markets in Canada mostly were better but non-eventful on Tuesday, sources said.

"It's quiet. A lot of issuers, if the market would improve, would come," a syndicate source said. "With rates this low, issuers that are coupon-sensitive have got to be considering coming at this point but we need a little bit of market stability before investors open up their wallets. The Ford deal might help."

Financials were better on the day. Toronto-Dominion Bank's 2.5% five-year notes (Aaa/AA-) were seen active in early trading.

Government bonds dropped, sending yields up, as stocks rallied. Canada's 10-year note yield added 5 basis points to 2.2%. The 30-year bond yield rose 3 bps to 2.84%.

"It's a risk-on day," a source said. "But we'll need more than one."

CIBC sells covered bonds

Canadian Imperial Bank of Commerce sold $2 billion of 0.9% three-year covered bonds on Tuesday to yield Treasuries plus 58.7 bps, a market source said.

The bonds (Aaa/AAA/AAA) were sold at 99.876 to yield 0.942%. They are non-callable.

The deal was sold under Rule 144A and Regulation S.

Bookrunners were CIBC World Markets, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and RBS Securities Inc.

The chartered bank is based in Toronto.

Canadian Utilities upsizes

Canadian Utilities sold an upsized C$275 million of cumulative redeemable second preferred shares to yield a 4% dividend for the initial 5½ years on Tuesday, the company announced.

The offering included 11 million of the series Y preferreds at a price of C$25.00 per share.

The deal was upsized from C$200 million, or 8 million shares.

The syndicate included RBC Capital Markets Corp., BMO Capital Markets Corp., TD Securities Inc. and Scotia Capital Inc.

The deal also has an over-allotment option of C$50 million, or 2 million additional shares.

The shares may be redeemed on June 1, 2017 and every fifth year thereafter.

Proceeds will be used for capital expenditures, to repay debt and for other general corporate purposes.

On the bond program, Canadian Utilities said that it intends to file a medium-term note prospectus supplement to its base shelf prospectus to establish a medium-term note program for the next 25 months with the same dealers, RBC, BMO, TD Securities and Scotia Capital.

Alberta-based Canadian Utilities operates in the utilities, energy and technologies sectors.

Toronto-Dominion active

In the secondary market, Toronto-Dominion Bank's 2.5% senior medium-term notes due 2016 were quoted early Tuesday at 115 bps bid, 105 bps offered, a trader said.

Toronto-Dominion Bank sold $1.25 billion of the notes on July 7 at Treasuries plus 85 bps.

The bank and financial services company is based in Toronto.

Andrea Heisinger contributed to this review

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