February 28, 2007
SHAW COMMUNICATIONS INC.
For some time, we have recommended the Senior Notes of Shaw Communications owing to steadily improving fundamentals and the relatively wide yield spread versus Government of Canadas. As a BB+ credit, Shaw bonds have traded as wide as 225 basis points over Canadas; we were attracted to these bonds because both rating services, DBRS and Standard and Poors, rated the Shaw issues just one half notch below investment grade with positive outlooks.
DBRS has now upgraded Shaw to investment grade, citing Shaw's strong cable franchise, EBITDA of $ 1 billion for the 12 months ended November 30,2006, and a significant improvement in the Company's risk profile. S and P also has a positive outlook.
As a result of this upgrade, the spread on the Shaws has narrowed to 160 over Canadas. Thus, all existing holders of Shaw bonds have seen the value of their bonds rise relative to Canadas.
Yesterday, Shaw issued $ 400 million of 5.70% Senior debentures and this issue was over-subscribed and sold only to institutions.
We have added these bonds to BondOne and the details are as follows:
Shaw Communications 5.70% March 2, 2017 @ $ 100.45 to yield 5.64% which is 161 basis points over the Canada 4s of 2016.
We recommend these bonds as relatively good value for investors seeking decent yield and income.
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