Deal schedule lightens; Rogers Communications, Bell Canada bonds widen, MEG Energy gains

By Cristal Cody

Prospect News, March 15 - The Canadian bond markets were mixed on Tuesday as events in Japan overshadowed trading.

High-grade bonds were mostly unchanged on the day, with some bank and financial paper out slightly.

New bonds from Rogers Communications Inc. and Bell Canada widened in trading, a source said.

"Some of the new issues are a touch wider," the source said. "But over the day, spreads are close to unchanged."

In the Canadian high-yield bond market, bonds traded up, according to sources.

MEG Energy Corp.'s new 10-year senior notes, which were sold the previous day, were stronger. "It priced yesterday at par - they're actually up at par and a half bid," a source said.

Another source said the notes traded late Monday at 101.25 bid, 101.75 offered.

Perpetual Energy Inc.'s bonds also were stronger at 100.5 bid late afternoon.

Calgary, Alta.-based oil and gas company Perpetual Energy sold the 8.75% senior notes due March 15, 2018 (B3/B-/) at par on Thursday.

"Perpetual Energy's [bonds] are premium bid as well," a source said. "It's nothing to do with energy, just a lot of high yield still has a fairly good bid to it."

Earlier in the day, the high-yield market was down about 0.50 point, a source said.

Trading in OPTI Canada Inc. paper also "really kicked back in," a source said.

Few, if any, new deals are expected through the rest of March.

"It's spring break here for the next two weeks, so I would be very surprised if anybody is trying to initiate a deal, and given this volatility, people would be rather sensitive to doing anything," a source said.

Government paper sees bid

Canadian government bonds rallied across the curve on the flight-to-quality bid. Investors continued to move into safer-haven bonds on reports of leaking radiation at one of Japan's nuclear power plants damaged from last week's earthquake and tsunami and escalating unrest in the Middle East and North Africa.

Canada's two-year note yield fell 5 bps to 1.63%, and the 10-year bond yield fell 4 bps to 3.2%.

Treasuries also rallied, sending the 10-year benchmark Treasury note yield down 6 bps to 3.3%.

Earlier, the Federal Reserve showed more confidence in the economy and affirmed its commitment to the $600 billion bond buyback program through June in a statement on Tuesday.

Traders expressed surprise that no mention of Japan was made.

"Buyers are just shocked at where yields have dropped to, we have 10s down to 3.31% after hitting 3.8% just a short time ago," said Mary Ann Hurley, a fixed income trader for D.A. Davidson & Co.

Rogers Communications wider

Toronto-based Rogers Communications' new 5.34% notes due March 22, 2021, which it sold on March 8 at 193.9 bps over the Canadian government benchmark, traded at a spread that was "closer to 200" bps on Tuesday, the source said.

The Toronto-based company provides wireless voice and data communications, cable television, internet and telephone services in Canada.

Bell Canada notes soften

Bell Canada's 4.4% series M-22 debentures due March 16, 2018 that it sold on March 9 at 136.6 bps over the Canadian government benchmark also widened in secondary trading, a source said.

"Bells are bid 142 [bps]," the source said.

The communications company sold the notes to finance the acquisition of CTVglobemedia Inc.

OPTI active again, lower

A trader said trading in OPTI Canada's subordinated notes "really kicked back in," with $25 million to $30 million of the 7 7/8% notes due 2014 turning over.

He said the notes hit a low of 49½ and a high of 521/4, closing near the highs.

Another trader pegged the paper at 501/4, down 2½ points on the day.

There was no news out on the Calgary, Alta.-based oil sands producer. The price of oil, however, did fall Tuesday to trade at $97.39 a barrel at one point.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.