High-yield bond issue rises in debut

TORONTO • Vidéotron Ltd.’s $ 800 million of bonds rose in its first day of trading as the largest high- yield bond in the Canadian bond market got a warm reception from investors.

The notes, which were priced at par Tuesday, are being quoted at about 100.5 cents, according to Industrial Alliance data on Wednesday. The deal was oversubscribed around three times, according to people familiar with the matter.

Vidéotron’s deal is the third junk- rated senior unsecured loonie bond sale after Cominar Real Estate Investment Trust and Kruger Packaging Holdings priced transactions earlier this year. While Vidéotron was able to double the size of its deal from $ 400 million, Stelco Holdings Inc., a Canadian company rated five steps below than Vidéotron, had top ulla U.S. dollar sale yesterday.

“Vidéotron is perceived as investment- grade quality trading at high- yield spreads ,” said Sue McNamara, at Beutel Goodman & Co., which oversees $ 42 billion of assets. “They have not been in the Canadian market since 2015.”

S&P Global Ratings grades Vidéotron at doubleB- plus, or one step below investment grade, while Moody’s Investors Service has it at the equivalent rating, Ba1. The transaction was placed with 63 buyers and fills were between 10 per cent and 15 per cent, according people familiar with communications provided by deal arrangers to investors. The 4.5 per cent bonds mature in 2030.

Companies such as Russel Metals Inc., Cascades Inc. and Parkland Fuel Corp., which have callable debt, are firms investors may expect to follow suit, said Dhruv Mallick, a high- yield portfolio manager at Leith Wheeler Investment Counsel Ltd. Air Canada may be another company on investors’ radars, he said.

A representative for Vidéotron’s parent company Quebecor Inc. did not return a call and emailed request for comment.