Yukon Energy president David Morrison entered the fast-paced world of security trading on Wednesday when the Crown corporation issued a $100-million bond to lenders, big and small.
Morrison spent the day in a TD Bank conference room in Toronto fielding calls from the trading desks of major Canadian banks when the bond hit the market.
“It was a bit of a blur yesterday when it was all happening,” said Morrison, speaking from Vancouver Thursday.
“It happens really fast.”
The $100 million sold in little more than an hour. The creditors who decided to buy the bond, which will be used to pay for energy projects in the territory, bought it in chunks of $2 million to $20 million, he said.
There were too many interested buyers and some had to be turned away, he said. But by Thursday afternoon it appeared nearly all of the bond had been sold.
“It’s a good statement on the Yukon, the debt rating and the (energy) projects; and I think it’s good for the territory to get that kind of exposure.”
TD Securities is the trading house that managed the bond for the Yukon Development Corporation, the official bond issuer and Yukon Energy’s parent company. TD organized the sale by going to several other banks - Scotiabank, CIBC and Royal Bank - and asking them to look for possible buyers.
“They went out to their contacts in the market in large institutions and looked at how well it would sell,” said Morrison.
The interest rate for the bond, which will mature in 30 years, is five per cent. That was helped by a positive rating issue for the Yukon done by Standard and Poor’s last week.
Most of the bond purchasers were large scale, but there was a retail sale for individual investors.
In the last few weeks, each of the four big banks have been contacting clients in the Yukon to see who wanted to get a piece of the action, said Morrison.
There might still be some of the bond left for retail buyers, he said. Just $5 million was tagged for retail sale.
He’s not sure if the list of either large-scale bond buyers will be made public. A report compiled by TD on the sale will be finished in the next few weeks, he said.
The sale closes on June 29 and that’s when Yukon Development will get its $100 million.
The bond will finance part of the $120-million Mayo B project, as well as a section of the Carmacks-Stewart Crossing transmission line. Another chunk will be saved for yet-to-be-determined energy projects.
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