York sells C$300 million in two tranches; Tone improves, Yellow Media rises in trading

By Cristal Cody

Prospect News, Nov. 2 - Financial markets in Canada and the United States stayed quieter on Wednesday following the turmoil of Tuesday's headlines from Greece, bond sources said.

Corporate issuers kept to the sidelines, while a municipal bond deal priced on Wednesday from the Regional Municipality of York, which sold C$300 million in two tranches.

In the secondary market, Yellow Media Inc.'s high-yield notes traded higher, a source said.

Corporate bonds traded better on the day though activity was slow, sources said. The Markit CDX Series 17 North American high-grade index firmed 2 basis points to a spread of 125 bps.

Market tone was a "little bit better than yesterday, but still cautious," one bond source said. "Nothing got done yesterday, and everyone was just very nervous."

No additional monetary policy measures were announced on Wednesday after the U.S. Federal Reserve wrapped a two-day meeting, but the Fed's statement leaves a third round of quantitative easing on the table, a bond source said.

Government bonds were mostly flat on Wednesday after gains on Monday and Tuesday on the European debt crisis. Canada's two-year note yield rose 3 bps to 0.96%. The 10-year note yield ended unchanged at 2.17%.

Canada's auction of C$3 billion of three-year government bonds on Wednesday saw good demand.

The Bank of Canada sold the 1% notes at an average yield of 1.219%. Bidders offered to buy 2.361 times the amount of debt sold.

York taps market

In primary activity, the Regional Municipality of York (Aaa/AAA) sold C$300 million in two tranches of 10-year and 30-year bonds on Wednesday, a bond source said.

York sold C$200 million in a reopening of the 4% notes due June 30, 2021 at 104.908 to yield 3.397%. The notes priced at a spread of 119 bps over the Government of Canada benchmark.

The region first sold the 10-year note issue on June 21 at 99.869 to yield 4.016%, or a spread of 103 bps over the Canadian government benchmark.

The region sold C$100 million in a new issue of 4.15% bonds due Nov. 18, 2041 at 99.966 to yield 4.152%, or a spread of 131 bps over the government benchmark.

RBC Capital Markets Corp. was the lead manager.

The issuer is made up of nine municipalities in Ontario.

Yellow Media rises

In the secondary market, Yellow Media's 6½% notes due 2013 (DBRS: BB) traded higher at 68 on Wednesday, up from 64.25 a week ago, a bond source said.

The phone directory publisher is based in Montreal.

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