Canadian deal calendar thin in pre-holiday week; DirectCash up, Newalta, Superior Plus off

By Cristal Cody

Prospect News, Aug. 3 - Canadian bonds tightened on a positive tone in the short day of trading on Friday with no primary market activity, informed market sources said.

The Canadian bond markets closed early on Friday and will be closed on Monday for a civic holiday.

"We're a half day, so no volume," a high-yield bond source said. "It's all dead."

The Canadian investment-grade market also saw a "pretty quiet day today," a bond source said. "There wasn't too much action. Spreads opened 1 to 2 basis points tighter considering they closed a touch wider yesterday. Given the half day, it was pretty light activity in the corporate markets."

A roadshow for C$250 million of five-year senior secured first-lien notes (Baa3/B+/) from Toronto-based newspaper publisher Postmedia Network Inc. is expected in the short week ahead. The roadshow will be held in New York on Monday and in Toronto on Tuesday and Wednesday.

Scotia Capital Inc. and Morgan Stanley are the bookrunners.

DirectCash Payments Inc.'s new notes due 2019 sold the previous day edged up in secondary trading on Friday, a bond source said.

"It's traded up a little bit," the source said.

In other trading, Newalta Corp.'s senior notes (B1//DBRS: BB) were lower on the week, following a stronger second-quarter earnings release, a source said.

Superior Plus LP's high-yield debentures were weaker in trading after it reported lower quarterly revenue.

Corporate bonds tightened on the day's positive tone, sources said.

The Markit CDX Series 18 North American investment-grade index firmed 5 basis points to a spread of 104 bps.

The Markit CDX Series 18 North American high-yield index closed higher at 97.68 from 96.67.

Government bonds traded lower on stronger U.S. jobs data and expectations the European Central Bank will start a short-term bond purchase program. Canada's 10-year note yield jumped to 1.77% from 1.67%. The 30-year bond yield climbed to 2.31% from 2.25%.

DirectCash higher

DirectCash's 8 1/8% notes due Aug. 8, 2019 rose to 100.875 bid, 101.75 offered, a source said.

The company priced C$125 million of seven-year senior notes (B3/B/) at par to yield 8 1/8% on Thursday.

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

Newalta lower

In other secondary trading, Newalta's 7 5/8% notes due 2017 fell to 106.5 bid on Friday from 107 bid last month. The company's 7¾% notes due 2019 traded lower at 106.75 bid from 107.25 bid, a bond source said.

Newalta sold C$125 million of the five-year notes at par on Nov. 18, 2010 and priced C$125 million of the seven-year notes at par on Nov. 8, 2011.

The company said on Thursday that second-quarter revenue rose 4% to C$171 million. Earnings for the quarter ended June 30 climbed to C$18,626,000, or 38 cents a share, from C$10,483,000, or 22 cents a share, in the same period a year ago.

Newalta is a Calgary, Alta.-based industrial waste management and environmental services company.

Superior Plus falls

Superior Plus' 8¼% senior debentures due 2016 traded lower at 104.5 bid on Friday from the 105.25 range it traded at in July, a bond source said.

Superior Plus sold C$150 million of the debentures (/BB-/DBRS: BB) at par in 2009. Market sources expect the notes to be called in October 2013.

The company reported on Thursday that revenue for the second quarter ended June 30 fell 7% to C$834.3 million.

Superior Plus is a subsidiary of Calgary, Alta.-based Superior Plus Corp., which operates energy distribution, specialty chemicals and specialty construction divisions.

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