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USD CDS Summary: Best Buy & Goldman Sachs make their marks
Andre Hinckson, Informa Global Markets - CDS Morning Insight (US) (June 14, 2006)

U.S. producer prices increased (PPI), 0.2% in May as energy prices moderated, but core prices inched higher amid signs that inflationary pressures are growing. In the past year, the PPI is up 4.5%, which is the fastest year over year gain since January. The core PPI is up 1.5% in the past year. While prices for finished goods were relatively tame, prices for goods under production jumped.

In the retail & consumer sector Best Buy Co saw its shares jump 5% as the company reported its biggest profit increase in the Q1 for a year on rising demand for flat panel televisions. Best Buy recorded a net income rise of 38% to USD234mln, or 47 cents per share, from USD170mln, or 34 cents per share only 1 year ago. 5yr default in Best Buy has seen a market of 33/40 as of Tuesday's close. Also reporting solid earnings was Goldman Sachs, who saw its strongest quarter in 6 years at its investment banking unit as well as strong trading results in fixed income and equities helped the firm more than double its second quarter net income. For the quarter ending May 31, Goldman earned USD2.31bln, or USD4.78 per share, compared to last year's Q2 earnings of USD865mln, or USD1.71 per share in the year-earlier period. The firm also reported total net revenue of USD10.10bln compared to USD4.81bln last year. 5yr default in Goldman Sachs has seen a slightly wider closing market of 28/30 on Tuesday.

Joining in on the World Cup frenzy was the number two manufacturer of wireless handsets, Motorola, Inc, who struck a 3 year deal with soccer super star David Beckham. Terms of the exclusive, 3 year collaborative agreement weren't disclosed. 5yr default in Motorola closed with a market of 28/32 on Tuesday.

In the auto sector Visteon Corp. said it has closed on a new 7 year secured term loan of USD800mln. Visteon said it will also repay USD50mln of borrowings from the company's USD771mln multiyear secured revolving credit facility, which the company expects to eliminate when it closes on new U.S. and European 5 year revolving credit facilities. 5yr default in the company finished on Tuesday with a wide mid of 650/675. The United Auto Workers, facing job cuts by U.S. automakers, approved steps aimed at bolstering the union's finances as it works to recruit new members and halt a slide in membership. The UAW plans to channel more money from the organization's strike fund, which totaled USD914.2mln at the end of 2005, to its local unions. 5yr default in GMAC made a marginal half basis point tightening move to a closing mid of 284.5 on Tuesday. Meanwhile 5yr default in Ford Motor Credit extended 3 bps wider to a closing mid of 490.5 on Tuesday, which is out from Monday's close of 487.5. Elsewhere 5yr default in Sear Acceptance could be seen widening 3 bps to a closing mid on Tuesday of 98.5.

Andre Hinckson



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