May 28, 2010, 6:24 AM EDT
may 28 (Bloomberg) -- Viterra Inc., the largest Canadian grain handler, delayed the sale of as much as C$500 million ($477 million) of bonds amid rising borrowing costs.
“Investor interest in the new offering has been strong; however, pricing and closing of the transaction have been delayed pending stabilization in global credit markets,” the company said may 26 in an e-mail.
It planned to sell the senior unsecured notes to repay existing debt, Regina, Saskatchewan-based Viterra said may 4 in a statement. TD Securities Inc. and RBC Dominion Securities Inc. led the underwriting group.
“Viterra is being repriced back to a more high-yield bond,” Ric Palombi, a Calgary-based fixed income fund manager at McLean & Partners Wealth Management Inc., said in a phone interview. “The overall market sentiment is not in Viterra’s favor right now.”
at least 22 companies worldwide postponed or withdrew about $5 billion worth of debt sales since April 13, according to data compiled by Bloomberg, amid falling prices for non-investment- grade debt and outflows from high-risk fixed-income funds. Yields on corporate bonds rose to 4.04 percent yesterday from 3.87 percent on may 6, according to the Bank of America Merrill Lynch Global Broad Market Corporate Index.
Moody’s Investors Service assigns Viterra a long-term rating of Ba1, one level below investment grade, while Standard & Poor’s rates the company one step higher, at BBB-.
Yield Premium
the yield premium on Viterra’s existing five-year, 8.5 percent notes maturing in July 2014 was 378 basis points. the average premium for the Bank of America Merrill Lynch index of Canadian high-yield debt was 542 basis points, up from 481 basis points on April 21. A basis point equals 0.01 percentage point.
Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, and Las Vegas-based Allegiant Travel Co. withdrew bond deals this week, Bloomberg data show.
elsewhere in credit markets, Tim Hortons Inc., operator of doughnut-and-coffee restaurants, sold C$200 million of 4.2 percent bonds maturing in June 2017. the notes were priced to yield 120 basis points more than comparable government of Canada debt.
Ontario, Canada’s most populous province, raised 132.6 billion yen ($1.46 billion) in the biggest cross-border bond sale in Japan’s currency in more than a year, according to Bank of America Corp.
Ontario also increased the size by C$600 million of a previous sale of 4.6 percent-coupon bonds maturing in 2039, according to Bloomberg data. the debt was priced to yield 99 basis points more than government of Canada debt.
Province of Quebec
the province of Quebec also sold C$500 million of 5 percent notes, reopening an issue maturing in 2041. the debt was priced to yield 110 basis points more comparable Canadian government debt, Bloomberg data show.
Canada’s dollar advanced for the first time in four days against its U.S. counterpart on reduced concern that Europe’s debt turmoil will worsen.
the currency climbed as much as 2.1 percent to C$1.0481 per U.S. dollar in the biggest intraday gain since may 10. one Canadian dollar buys 95.40 U.S. cents.
the Canadian dollar has lost about 3 percent this month as investors sought refuge from Europe’s sovereign-debt crisis. It gained 3.35 percent through April after reaching parity with the greenback on April 6 for the first time in almost two years.
the loonie, as the Canadian currency is known for the aquatic bird on the C$1 coin, touched C$1.2650 versus the euro on may 18, the strongest since July 2001.
Absorbing Acquisitions
Viterra is digesting it’s A$1.6 ($1.36 billion) acquisition last year of ABB Grain Ltd., an Australian grain handler, amid falling crop prices and forecasts of rising global grain stockpiles.
Earlier this month, the company said it consolidated its credit facilities in Canada and Australia into a C$1.6 billion revolving line in an agreement with lenders that include TD Securities and RBC Capital Markets.
the company also is expanding in Canada and the U.S. through smaller, “bolt-on” acquisitions, Chief Executive Officer Mayo Schmidt said earlier this month in an interview at Bloomberg headquarters in new York.
Viterra yesterday said it signed a definitive agreement to acquire 21st Century Grain Processing, a U.S.-based processor of oats, what and other grains for $90.5 million.
As a grain handler, Viterra gathers grains and oilseeds from farmers, tests them for quality, and cleans, dries and blends them in preparation for shipping. Viterra controls about 45 percent of Canada’s grain-handling capacity.
--With assistance from Craig Trudell in new York. Editors: Michael Weiss, Dave Liedtka
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.
To contact the editors responsible for this story: Dave Liedtka at dliedtka@bloomberg.net; Simon Casey at scasey@bloomberg.net.
Viterra Delays C$500 Million Bond as Costs Rise: Canada Credit