National Bank of Canada sells $1 billion; PetroBakken in U.S. as Canada high-yield slows

By Cristal Cody

Prospect News, Jan. 25 - Canada's investment-grade market saw a C$1 billion three-year deposit note offering from National Bank of Canada on Wednesday.

Across the border, PetroBakken Energy Ltd. brought a U.S. dollar-denominated $900 million high-yield sale of eight-year senior notes, a day following Cash Store Financial Services Inc.'s Canadian dollar bond deal.

Another Canadian high-yield deal in the works since December for a February pricing has been "delayed slightly," a syndicate source said on Wednesday.

"We still expect to see it," the source said.

Cash Store Financial's sale of C$132.5 million of 11½% five-year senior secured notes (B3/B/) on Tuesday was the second high-yield deal in Canada so far this year.

Western Energy Services Corp. priced C$175 million of seven-year senior notes (B3/B+) on Jan. 20.

"We've just had so little issuance here compared to the U.S.," a source said.

The Canadian market is "lacking issuers at the moment but certainly not buyers," the source said. "There seems to be no rush to come to the market from the issuer side."

Investment-grade issuance has picked up over the month with bond sales from issuers including GE Capital Canada Funding Co., John Deere Credit Inc., RioCan Real Estate Investment Trust and Canadian Western Bank.

Corporate bonds continued to trade better in the secondary market on Wednesday, sources said.

The Markit CDX Series 17 North American investment-grade index tightened 2 basis points to a spread of 102 bps on Wednesday.

Canadian government bonds rallied on the short to mid range of the curve after the Federal Reserve's statement. The 10-year note yield fell 2 bps to 2.04%. The 30-year bond yield was flat at 2.65%.

National Bank of Canada prices

In Canada's primary activity, National Bank of Canada sold C$1 billion of 2% three-year deposit notes (Aa2/A/DBRS: AA) to yield 2.231% on Wednesday, a bond source said.

The notes due Jan. 30, 2015 priced at a spread of 108 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the bookrunner.

The financial services company is based in Montreal.

PetroBakken upsizes, prices

In the U.S. high-yield market, PetroBakken Energy priced an upsized $900 million issue of 8 5/8% eight-year senior notes (Caa1/CCC+) at 99.5 to yield 8.713%, according to an informed source.

The yield came toward the tight end of price talk, which had been set in the 8¾% area.

Credit Suisse Securities (USA) LLC and Bank of America Merrill Lynch were the joint global coordinators for the deal, which was upsized from $750 million.

Credit Suisse, Bank of America Merrill Lynch and RBC Capital Markets, LLC were the joint bookrunners.

The Calgary, Alta.-based light oil exploration and production company plans to use the proceeds to fund the concurrent partial tender of up to $450 million of its convertible notes maturing in 2016 and to repay a portion of its revolver.

Paul A. Harris contributed to this review

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