The equity new issues market showed signs of life Tuesday afternoon after a quiet period surrounding the U.S. and Canadian national holidays. But the two new deals carried a message: Investors want yield in these choppy markets.
Northland Power Income Fund launched a $100-million bought offering of rate-reset preferred shares yielding 5.25 per cent, a 280-basis-point-spread to Canada bonds. CIBC World Markets led the transaction, which was ultimately upsized to $150-million on the back of strong demand.
National Bank Financial and RBC Dominion Securities also brought $30-million worth of seven-year, 7 per cent converts to market for Rocky Mountain Dealerships Inc., the operator of agriculture and construction equipment dealerships.
This thirst for yield isn't new. A number of converts launched prior to the long weekend, including $75-million for Fort Chicago Energy Partners L.P. and $53-million for Consumers' Waterheater Income Fund. So even if institutional players sit back to see how the market turmoil plays out, retail investors appear to see potential in deals that are priced correctly.