Transurban brings inaugural maple deal; Sun Life, TransCanada tap markets, notes gain

By Cristal Cody

Prospect News, Feb. 28 - Transurban Finance Co. Pty Ltd. of Australia brought Canada's third maple bond deal of the year on Tuesday with an offering of C$250 million of seven-year medium-term notes.

The first two foreign corporate issuers to sell bonds in Canada were International Business Machines Corp. on Feb. 3 and BP Capital Markets plc on Feb. 16.

"We may see more maple issuance following this deal," one bond source said. "There are a lot of rumors right now. The environment's good."

Also wrapping a deal on Tuesday, Sun Life Financial Inc. tapped the Canadian bond markets for C$800 million of fixed-to-floating-rate notes.

In the U.S. market over the day, TransCanada Pipelines Ltd. raised $500 million of three-year senior notes.

Canadian domestic primary activity likely will stay muted depending on tone, sources said.

"It looks pretty light this week," a source said. "There are almost no roadshows."

The Province of Manitoba may bring a benchmark bond deal in the U.S. investment-grade market, a source said.

"It's expected to launch in the near future. If tone is good, it likely will launch tomorrow, but it's yet to be determined," the source said.

The Markit CDX Series 17 North American high-grade index firmed 1 basis point to a spread of 94 bps.

In the secondary market, Sun Life Financial's paper tightened about 6 bps soon after pricing, a source said.

TransCanada Pipelines' notes firmed 5 bps in trading.

Canadian government bonds were better on the day. The 10-year note yield fell 3 bps to 1.97%. The 30-year bond yield ended at 2.59% from 2.62%.

Transurban sells maple bonds

Transurban Finance sold C$250 million of 3.368% seven-year medium-term notes (Baa1/A-/) at par on Tuesday in its first maple bond offering in Canada, according to bond sources.

The notes due March 6, 2019 priced on top of guidance at 170 bps over the Government of Canada benchmark.

"In a time of global economic uncertainty, Transurban has entered the deep Canadian bond market for the first time," Transurban chief financial officer Tom Honan said in a statement. "This transaction further diversifies Transurban's funding sources and generates competitive seven-year debt funding. As we have communicated to the market, this was not a mandatory refinancing at this time, but rather, reflects Transurban's continued proactive management of its financing requirements."

Transurban's next corporate debt maturity is in April 2013.

RBC Capital Markets Corp. and Scotia Capital Inc. were the lead managers on the deal. CIBC World Markets Inc. was the co-manager.

Proceeds will be swapped back into Australian dollars at a rate of 6.657% fixed for the life of the notes. The proceeds will be applied to the repayment of drawn working capital lines and to fund Transurban's capital expenditure.

The financing unit is a subsidiary of Melbourne-based Transurban Group, an international toll road owner and operator with interests in Australia and the United States.

Sun Life sells C$800 million

Sun Life Financial (/A-/DBRS: A) priced an upsized C$800 million of 4.38% subordinated debentures at 99.978 to yield 4.385% on Tuesday, an informed bond source said.

The series 2012-1 debentures priced at a spread of 297 bps over the Government of Canada benchmark, tighter than guidance of 300 bps plus or minus 5 bps.

The fixed-to-floating-rate issue has a final maturity of March 2, 2022 but converts to a floating rate on March 2, 2017.

The deal was upsized from C$600 million and had more than 60 buyers.

RBC Capital Markets and BMO Capital Markets Corp. were the bookrunners.

Proceeds will be used for general corporate purposes, which may include investments in subsidiaries and repayment of debt.

The company was last in the Canadian bond markets on Aug. 17 with an offering of C$300 million of 4.57% 10-year senior debentures priced at 99.96 to yield 4.575%, or a spread of 214.9 bps over the government benchmark.

In the secondary market, the new issue firmed to 291 bps bid, a source said.

Toronto-based Sun Life Financial is one of the largest international financial services companies in Canada and operates subsidiary Sun Life Assurance Co. of Canada.

TransCanada taps U.S. market

Across the border, TransCanada Pipelines priced $500 million of 0.875% three-year senior notes on Tuesday at a spread of Treasuries plus 60 bps.

The notes (A3/A-/) were sold at 99.629 to yield 1.001%. There is a make-whole call at 10 bps over Treasuries.

Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. were the bookrunners.

Co-managers were Bank of America Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA) Inc., Mizuho Securities USA Inc. and UBS Securities LLC.

Proceeds are being used for general corporate purposes and to reduce short-term debt of the corporation and its affiliates.

The notes firmed in secondary trading to 55 bps bid, 53 bps offered, a trader said.

TransCanada last priced notes in the U.S. market in a $1 billion sale of 10-year notes on Sept. 20, 2010.

The natural gas pipeline is based in Calgary, Alta.

Andrea Heisinger contributed to this review

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