Markets eye fall deal pipeline; Telstra plans roadshow; Alberta firms, DirectCash drops

By Cristal Cody

Prospect News, Aug. 24 - Telstra Corp. Ltd. is expected to end August with an informational roadshow in the U.S. and Canadian bond markets in the week ahead, informed bond sources said on Friday.

"Telstra management is coming into the U.S. and we managed to get them up north for a day," a bond source said. "At this point it's a non-deal roadshow, but we'll just wait and see what comes of it. In terms of financing, they've got Australian dollars, U.S. dollars and Canadian dollars."

Otherwise, Canada's deal pipeline is light as the month closes with more issuance expected in the fall, bond sources said.

The week ahead likely will be one of the quietest weeks of the month headed into the long weekend, one source said.

"A number of accounts are taking next week off," the source said. "Today's been very quiet. There's very little going on."

The Canadian and U.S. bond markets will be closed on Sept. 3 for the Labor Day holiday. The Canadian markets also will close early on Aug. 31 ahead of the holiday.

No corporate or provincial issuance is expected, other than possible drive-bys, sources said.

"Quebec is in blackout until after the elections on Sept. 4," a provincial bond source said.

Other provincial issuers also are expected to stay on the sidelines until after the Labor Day holiday.

In the provincial secondary market, the Province of Alberta's 2.55% 10-year notes sold the previous day traded 3 basis points tighter, while the Province of Ontario's bonds widened about 1½ bps, a source said.

"Ontario's just widening with the rest of the market and credit in general," the source said.

Alberta saw good demand for its bonds on Thursday, possibly because of the "scarcity value of their bonds; there's not a lot," the informed source said. "People like the credit and the Street was left a little short of the issue following the deal."

Trading slows

Trading volume was light on Friday.

"Spreads are little changed, maybe a bit wider," a bond source said. "We haven't really done a trade all day. It's very much a summer market. I would expect next week to be more of the same. But fall should be busy."

The Markit CDX Series 18 North American investment-grade index firmed 1 bp to a spread of 101 bps.

The Markit CDX Series 18 North American high-yield index inched up to 98.06 from 97.92.

New high-yield debt priced over the summer continues to trade above issue price, though bonds were mixed over the week, a source said on Friday.

Postmedia Network Inc.'s new 8¼% senior secured first-lien notes due 2017 saw little trading over the week and went out flat on Friday.

DirectCash Payments Inc.'s 8 1/8% senior notes due 2019 traded nearly 1 point lower on the week, while Great Canadian Gaming Corp.'s 6 5/8% senior notes due 2022 edged higher.

In other trading, Baytex Energy Corp.'s 6 5/8% senior debentures due 2022 fell slightly over the week but remain stronger than issuance.

Government bonds closed weaker across the curve. Canada's two-year note yield rose 2 bps to 1.15%. The 10-year note yield closed up 1 bp to 1.83%.

Telstra plans roadshow

Telstra (A2/A/A) is expected to hold its non-deal roadshow in the U.S. and Canadian bond markets in the week ahead, informed bond sources said.

The company will be in Canada on Aug. 31.

RBC Capital Markets Corp. and Scotia Capital Inc. are the hosts.

Melbourne-based Telstra is Australia's leading telecommunications company.

Alberta firms

The Province of Alberta's 2.55% notes due 2022 firmed 3 bps to 75 bps on Friday in secondary trading, a bond source said.

"This was the first 10-year benchmark in a while, and it's just a good triple-A name," the source said.

Alberta (Aaa/AAA/DBRS: AAA) sold C$720 million of the 10-year notes at a spread of 78 bps over the Government of Canada benchmark on Thursday.

Postmedia flat

In high-yield trading, Postmedia Network's 8¼% senior secured first-lien notes due 2017 ended flat on the week at 100.875 bid, a bond source said.

Postmedia Network sold C$250 million of the notes (Ba3/B+/) on Aug. 9 at par.

The company, a subsidiary of Postmedia Network Canada Corp., is a Toronto-based newspaper publisher.

DirectCash lower

DirectCash Payments' 8 1/8% senior notes due 2019 priced earlier in the month traded slightly lower on Friday at 101.25 bid, a bond source said.

DirectCash Payments sold C$125 million of the notes (B3/B/) at par on Aug. 2.

Calgary, Alta.-based DirectCash is a provider of ATMs, debit terminals and prepaid products.

Great Canadian Gaming gains

In other trading, Great Canadian Gaming's 6 5/8% senior notes due July 25, 2022 rose 0.125 of a point on the week to 102.5 going out on Friday, a source said.

Great Canadian Gaming sold C$450 million of the 10-year notes (B1/BB+/) on July 18 at par.

The Richmond, B.C.-based gaming, entertainment and hospitality company has operations in Canada and the United States.

Baytex holds

Baytex Energy's 6 5/8% senior debentures due 2022 stayed mostly flat on the week while still holding stronger than the issue price in the secondary market, a source said on Friday.

The debentures (B1/BB-/) traded going out on Friday at 105 bid.

Baytex Energy sold C$300 million of the 10-year series C debentures at par on July 10.

Calgary, Alta.-based Baytex is an energy exploration and production company.

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