Canadian bonds weaken on European concerns; Rogers marketing new deal; Yellow Media down

By Stephanie N. Rotondo

Phoenix, May 30 - The Canadian bond market was following the global trend Wednesday, as European concerns pushed most markets lower.

"It's all about Europe falling apart," a market source said. He noted that Spain "has lost control of their crisis-control handling abilities" and that German bond yields had fallen to 0%.

Another source said that he had been seeing a sell-off of shorter-dated maturities as investors flocked to "cheap U.S. securities."

Among corporate issues, Rogers Communications Inc. was reportedly marketing a new two-tranche deal valued at up to C$1.25 billion.

"They're a regular issuer in Canada," a trader said.

Meanwhile, Yellow Media Inc. was taking a hit following an analyst downgrade on Tuesday.

In provincials, the Province of Ontario priced a C$750 million reopening of its 3.15% 10-year notes. A trader said the deal was "trading fine."

Also performing well were new issues from British Columbia and Manitoba, both of which priced on Tuesday.

Rogers to bring deal

Rogers Communications is planning a two-tranche offering of bonds that will total at least C$800 million, according to market sources.

One source said the issue would consist of a five-year and 10-year issue. Another source said the five-year paper was talked at 165 basis points over the Canadian government benchmark, while the 10-year notes were at a 225 bps spread.

"It's being marketed right now," the second source said.

Other sources indicated the issue could come as large at C$1.25 billion.

The Vancouver, B.C.-based company is a diversified Canadian communications and media company.

Yellow Media sees selling

A trader said there was "selling" in Yellow Media bonds just one day after DBRS downgraded the Montreal-based phonebook publisher.

The trader placed Yellow's bonds at 52 "pretty much across the board."

On Tuesday, rating agency DBRS said it had cut its issuer rating on Yellow Media to CCC from B (low). The agency said the trend remained negative.

The downgrade was based on a decline in print revenues and an expectation that the declines would continue at a rapid pace.

Ontario prices add-on

The Province of Ontario issued a C$750 million add-on to its 3.15% notes due June 2, 2022, a trader reported Wednesday.

The issue was priced at 102.953 to yield 2.809%, or a 103 bps spread over the Canadian 10-year government benchmark.

"It's trading fine," he said, placing the paper at 103.

The lead manager was National Bank Financial.

Provincials 'doing fine'

Among other recently priced provincial deals, British Columbia's C$700 million two-tranche sale and Manitoba's C$300 million of 3.35% 30-year bonds - both of which priced Tuesday - were "doing fine," according to a trader.

"There's good demand for both deals," he said.

British Columbia's C$500 million of new 2.7% bonds due Dec. 18, 2022 were still trading at 91 bps over the Canada benchmark, a 2.75% bond due 2022. The C$200 million of 4.3% long bonds due June 18, 2042 - a reopening - were trading at benchmark plus 97 bps, about half a basis point better, the trader said.

Manitoba's new issue was also hanging around its pricing levels at about 99 bps over the Canadian benchmark 4% bond due June 2041.

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