Signs of Life for Canada's High Yield Market

| About: North American (NOA)

By Boyd Erman

Momentum for a big, sustainable market in Canada for high yield debt is still building, with North American Energy Partners (NYSE:NOA) pulling the trigger on a $225 million offering.

It's the first time the Edmonton-based construction company sold debt in Canada, which until the past year had been a pretty marginal market for high yield. Now, with Canadians looking for income, companies are finding good terms on this side of the border.

So good, in fact, that NAEP upsized the deal from $150 million thanks to demand from Canadian buyers.

The deal "underscores growing domestic demand for Canada's high yield market which had largely laid domant until August of 2009," said Susan Rimmer, who heads debt capital markets at CIBC World Markets Inc., which was sole bookrunner and joint lead on the deal.

According to CIBC, the seven-year debt sold with a 9.125% interest rate, translating into a 585-basis-point premium to the comparable government of Canada bond.