Baytex, Financement-Quebec, First Capital Realty tap Canadian markets; Batex trades higher

By Cristal Cody

Prospect News, July 10 - The Canadian debt markets offered something for high-yield, high-grade and provincial investors with three debt offerings on Tuesday.

Baytex Energy Corp. raised C$300 million of 10-year senior debentures in a deal that went "very well," a syndicate source said, noting the deal "had over 50 buyers" and "went very, very well."

The debentures traded higher in the secondary market going out on Tuesday.

In the high-grade market, First Capital Realty Inc. came with a C$50 million reopening of its 4.43% series O senior debentures.

Also on Tuesday, Financement-Quebec priced C$500 million of 2.45% seven-year notes, a bond source said.

"There's a really decent tone in the market," a provincial bond source said. "A lot of it has to do with walking in this morning equities seemed to be doing well on some partisan news out of Europe. The provincial market reacted accordingly, and we've seen pretty good buying throughout the day."

More provincial issuance for the week is possible, though deal activity likely will thin later in the week due to an annual gathering of provincial issuers, a source said.

Provincial bond spreads ended better on the day, while corporate bonds traded mostly flat.

Provincial bonds firmed ½ of a basis point to 1 bp across the curve, a source said.

The Markit CDX Series 18 North American investment-grade index ended unchanged at a spread of 111 bps.

Government bonds ended the day flat. Canada's 10-year note yield closed at 1.66%. The 30-year bond yield went out unchanged at 2.30%.

Baytex prices C$300 million

Baytex Energy sold C$300 million of 6 5/8% 10-year senior debentures at par, an informed bond source said.

The series C debentures due July 19, 2022 (B1/BB-/) priced at a spread of 496.8 bps over the Government of Canada benchmark.

The deal was offered in Canada and as a private placement in the U.S. markets under Rule 144A.

TD Securities Inc. and RBC Dominion Securities Inc. were the lead managers.

The debentures are non-callable for five years.

Proceeds will be used to repay debt under Baytex's credit facilities, which will be drawn upon to fund the redemption of the company's U.S. dollar-denominated $150 million outstanding principal of 9.15% series A senior debentures due Aug. 26, 2016 and for general corporate purposes.

In the secondary market, the notes rose to 101.5 bid, 102.5 offered, a source said.

Calgary, Alta.-based Baytex is an energy exploration and production company.

First Capital Realty prices

First Capital Realty sold C$50 million of 4.43% series O senior debentures due Jan. 31, 2022 (Baa3/DBRS: BBB) in a reopening late in the day on Tuesday at 100.892 to yield 4.315%, according to the company and bond sources.

The debentures were talked at 265 bps over the Government of Canada benchmark, a source said. Final bond spread details were not immediately available.

RBC Capital Markets Corp. and TD Securities were the lead managers.

Proceeds will be used for development and redevelopment activities, for acquisitions and for general corporate purposes.

First Capital originally brought the issue on May 25 in a C$100 million offering priced at 100.372 to yield 4.383%, or a spread of 258.7 bps over the Canadian government benchmark.

The total outstanding is C$150 million.

Toronto-based First Capital Realty owns, develops and operates supermarket- and drugstore-anchored shopping centers in Canadian metropolitan areas.

Financement-Quebec active

Also in the primary market on Tuesday, Financement-Quebec (Aa2/A+//DBRS: A) sold C$500 million of 2.45% seven-year medium-term notes at 99.911 to yield 2.463%, a source said.

"We've had a very good experience," the source said. "It sold out quite quickly."

The notes due Dec. 1, 2019 priced at a spread of 105 bps over the Government of Canada benchmark.

National Bank Financial Inc. was the bookrunner.

The agency was last in the Canadian debt markets on April 19 with a C$500 million add-on to its 2.4% medium-term notes due Dec. 1, 2018, which priced at 99.41 to yield 2.664%, or a spread of 92 bps over the Canadian government benchmark.

The notes due 2019 traded unchanged from the issue price in the secondary market.

Financement-Quebec is a Quebec provincial agency that provides financial services to public institutions.

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