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Telesat taps U.S. market; Yellow Media paper trades higher, Connacher flat, Nexen eases
By Cristal Cody
Prospect News, Oct. 24 - The Canadian bond markets stayed quiet a third day with light deal activity expected for the remainder of the week, informed sources said on Wednesday.
Activity in the domestic markets is expected to be thin through the Oct. 31 fiscal year-end for Canadian banks, sources said.
Telesat Canada and Telesat LLC tapped the U.S. high-yield market on Wednesday with a $200 million add-on to their 6% senior notes due May 15, 2017.
New domestic high-yield issuance is expected in November, a bond source said.
"We might have some - people think there's going to be supply in Canada," the source said.
In Canada's high-yield secondary market, bonds were mostly unchanged, while the U.S. market is a bit weaker, a trader said.
"It's pretty much business as usual," the trader said. "It's firm, even though the equity markets are not that great."
Yellow Media Inc.'s senior notes "have been creeping up over the last few days" as the company gets close to approval for its final restructuring plan, the trader said.
Connacher Oil & Gas Ltd.'s bonds traded unchanged on the day, surprising some in the market.
"It should be down because the Government of Canada blocked the Petronas deal and Connacher was for sale and there's rumors of a foreign national buying it," a source said.
Bonds in the sector from companies including Nexen Inc. have traded lower after Canadian regulators on Friday rejected a C$5.2 billion bid for Calgary, Alta.-based Progress Energy Resources Corp. by Malaysia's oil and gas company Petronas.
Nexen's U.S. dollar-denominated bonds continued to widen in secondary trading, a source said.
Sherritt International Corp.'s bonds, the last high-yield paper that priced in the Canadian markets, traded flat on the day.
The Markit CDX Series 18 North American high-yield index fell to 99.27 from 99.87 the previous day.
The Markit CDX Series 18 North American investment-grade index eased 2 basis points to a spread of 99 bps.
Canadian government bonds traded mostly flat. The 10-year note yield closed unchanged at 1.85%. The 30-year bond yield rose 1 bp to 2.43%.
Telesat prices $200 million
Telesat Canada and Telesat LLC priced a $200 million add-on to their 6% senior notes due May 15, 2017 (existing ratings B3/B-) at 103.5 to yield 4.911% on Wednesday, according to a market source.
The reoffer price came at the rich end of the 103 to 103.5 price talk.
J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were the joint bookrunners for the quick-to-market deal.
Proceeds will be used to refinance PSP notes and Loral notes (shareholder notes) and for general corporate purposes.
Telesat is an Ottawa-based fixed satellite services provider.
Yellow Media up
Yellow Media's 7.3% senior notes due 2015 (/CC/DBRS: D) and other paper traded wrapped around 64 bid, a trader said on Wednesday.
The company said on Oct. 17 that it had reached a settlement with the ad hoc committee of holders of its existing convertible unsecured subordinated debentures that had contested the company's proposed recapitalization but now has agreed to support the recapitalization. Final approval is underway.
Montreal-based Yellow Media is a Canadian directory publisher.
Connacher unchanged
Connacher Oil & Gas' Canadian dollar-denominated 8¾% senior notes due 2018 (Caa2/BB-/) ended unchanged on the day at 84 bid, a bond source said.
The company sold C$350 million of the notes on May 20, 2011 at par.
The integrated oil company is based in Calgary, Alta.
Nexen cheaper
Nexen's 6.2% notes due 2019 widened to 108 bps bid, 103 bps offered, a source said on Wednesday.
The notes were quoted on Monday 10 bps wider on the day at 102 bps bid, 87 bps offered.
Nexen (Baa3/BBB-/DBRS: BBB) sold $300 million of the seven-year notes at a spread of 250 bps over Treasuries on July 27, 2009.
The company's notes moved out after Canadian regulators late Friday rejected a C$5.2 billion bid for Calgary, Alta.-based Progress Energy Resources Corp. by Malaysia's oil and gas company Petronas.
Nexen's shareholders and preferred shareowners approved the $15.1 billion buyout by Hong Kong-based Cnooc Ltd. in September.
The oil and natural gas producer is based in Calgary, Alta.
Sherritt flat
Sherritt International's 7½% senior debentures due Sept. 24, 2020 ended flat on Wednesday at 102.75 bid, 103.25 offered, a trader said.
The company sold C$500 million of the debentures (DBRS: BB) at par to yield 7½ % on Sept. 19.
Toronto-based Sherritt produces coal, oil, gas and power and mines and refines nickel.
Paul A. Harris contributed to this review
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