Yellow Media bonds end session lower, financials weaker in trading; TD Bank paper flat

By Cristal Cody

Prospect News, Sept. 30 - Canadian bond markets ended quietly on Friday as the month-end, quarter-end and Rosh Hashana holiday kept investors to the sidelines.

At least one deal is forecast in the week ahead from the Municipal Finance Authority of British Columbia, which is expected to sell C$100 million to C$150 million in a reopening of its 4.15% notes due June 1, 2021, a source said.

Other deals could be in the works for early October, depending on market tone, sources said.

"We'll see where things open up this week," one bond source said.

On the high-yield side, nothing so far is "in the pipeline," another source said. "The markets have a lot to do with that."

Yellow Media Inc.'s bonds stayed weaker in trading after a "very busy day" on Thursday, when sellers included investment-grade managers and retail investors and buyers included distressed debt investors and hedge funds, a source said.

In other trading, financials ended weaker with Bank of America Corp. notes as wide as 40 basis points on the week and other bank paper, including Morgan Stanley and Goldman, Sachs Group, Inc., all wider, traders said.

Toronto-Dominion Bank's notes traded mostly flat on the week, traders said.

Confidence also was lower in corporates on the day. The Markit CDX Series 17 North American high-grade index eased 4 bps to a spread of 144 bps on Friday.

Government bonds ended higher as investors moved into safer-haven debt on the overseas debt crisis. Canada's 10-year note yield fell 3 basis points to 2.15%. The 30-year bond yield fell to 2.77% from 2.8%.

In economic data, Statistics Canada said the real gross domestic product rose 0.3% in July following a 0.2% increase in June.

Yellow Media bonds weaker

Yellow Media's outstanding bonds have been actively traded since Wednesday and closed weaker on the week, sources said.

The bonds weakened after the company announced that it would take a C$2.9 billion charge in the third quarter and eliminate the dividend after the Oct. 17 payment. The phone directory publisher's outstanding bonds subsequently were downgraded to BB from BBB by DBRS on Wednesday.

In the secondary market, the 6.85% notes due 2013 traded down to 61 bid, 66 offered from 70 on Thursday, a source said.

Yellow Media is based in Montreal.

Toronto-Dominion Bank flat

Also in trading, Toronto-Dominion Bank's 0.875% notes due 2014 were seen offered at 60 bps on Friday, a trader said.

The notes priced on Sept. 7 in a C$2 billion tranche at a spread of Treasuries plus 58.4 bps.

In other trading, TD Bank's 2.5% senior medium-term notes due 2016 traded flat on the week at 110 bps bid, 100 bps offered, another trader said.

Toronto-Dominion Bank sold $1.25 billion of the notes on July 7 at Treasuries plus 85 bps.

The bank and financial services company is based in Toronto.

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