Markets quiet on half day; calendar seen as steady; Shaw Communications notes firm 2 bps

By Cristal Cody

Prospect News, Feb. 18 - Bond markets were quiet in Canada but on a positive tone on the half day of trading Friday, sources said.

Bond markets are closed on Monday in Canada and the United States.

"As a half day, you don't generally see too much," a source said. "It's pretty quiet and it's been a very big week for new issues in Canada. People are taking advantage of this half day by making it almost a no-day."

The upcoming week, though, is not likely to stay quiet, a source said.

"We'll hit the ground running on Tuesday. Investors have been very receptive to the new issues and that generally brings out issuers."

Some of the new deals sold over the week traded slightly better in the secondary market.

Shaw Communications Inc.'s deal that priced on Monday ended the week 2 basis points better, a source said Friday.

Also, the Greater Toronto Airport Authority's 5.3% 30-year bonds (A2/A/DBRS: A) were in 1 bp, a source said.

In high-yield activity, Superior Plus Corp.'s 8.25% notes due 2016 were seen trading early Friday at 103 bid, 104 offered, compared to Thursday's quote of 104 bid, 105 offered, a source said.

Superior announced its fourth-quarter earnings on Thursday and said it would reduce its monthly dividend to 10 cents a share, considered a positive move for bondholders. The Calgary, Alta.-based company operates in energy services and specialty chemicals and construction products.

Canadian government bonds were higher on economic data on Friday, following a different path from Treasuries. Statistics Canada said consumer prices fell to 2.3% in January from 2.4% in December. The core index fell to 1.4% in January from 1.5% in December.

Canada's 10-year bond yield dropped to 3.461% from 3.48%. The two-year note yield ended at 1.883% from 1.9%.

Treasuries were lower on choppy trading ahead of the three-day weekend. The 10-year note yield was up 1 bp at 3.58%. The two-year note yield fell 1 bp to 0.75%.

Treasuries rallied early on reports that Egypt said it allowed Iran to send two warships through the Suez Canal.

"We saw a block of five-year futures trading being done. There was a lot of jitteriness about leaving those short positions in Treasuries open for the long weekend," a source said. "We saw a sell-off well into early afternoon, then it rallied all the way back for most. The curve should flatten up over the next couple of days."

Shaw notes firm

Shaw Communications' notes were "modestly better" in the secondary market, a source said Friday.

The company sold an upsized C$400 million in a reopening of its 6.75% senior notes due Nov. 9, 2039 (Baa3/BBB-/DBRS: BBB) at a spread of 307 bps versus the Government of Canada benchmark.

"We opened them up at 305 [bps over the Canada benchmark]," a source said.

Calgary, Alta.-based Shaw Communications provides internet, phone and cable television services.

Toronto Airport tightens

Also in secondary trading, a source saw the Greater Toronto Airport Authority's notes sold on Thursday better by 1 bp.

The authority, which manages the Toronto Pearson International Airport, sold 5.3% medium-term notes due Feb. 25, 2041 at a spread of 146 bps over the Government of Canada benchmark.

The notes were "marginally tighter," the source said.

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