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USD CDS Summary: Ford & GM continues to take hits in sales
Andre Hinckson, Informa Global Markets - CDS Morning Insight (US) (July 5, 2006)

On Monday the Commerce Department said spending on U.S. construction projects decreased 0.4% in May, the biggest decline since September 2004. After trading higher early in the session on Monday, home-builder shares moved lower with the announcement by Commerce Department. The decrease was unexpected, as economists saw a 0.2% increase in spending on construction projects. 5yr default in home-builder names such as Pulte Homes Inc and D.R. Horton Inc moved slightly tighter, closing with markets of 74/79 & 99/104, while default in Centex Corp and Lennar Corp, also followed the trend, eventually finishing on Monday with mids of 64.5 and 68 respectively. In the auto sector Ford Motor Co. on Monday posted a 6.9% decline in June U.S. sales to 269,404 vehicles. Car sales rose 7.1% to 107,608 during the period, while truck sales fell 14.4% to 161,796. Sales of the Ford F-Series declined 9.7% to 65,452 vehicles. Ford said higher gas prices contributed to lower truck sales, particularly in the large SUV and pickup categories. 5yr default in Ford Motor Credit finished the holiday shortened trading session with a mid of 471.5, which is down 13.5 bps from Friday's closing mid of 485. General Motors Corp's fourth biggest investor Kirk Kerkorian said he is losing confidence in Chief Executive Officer Rick Wagoner's plan to fix the current GM woes, and still stands firm behind his idea to form an alliance with Carlos Ghosn's Nissan Motor Co and Renault SA to help GM recover from the USD10.6bln in losses it has sustained in 2005. General Motors Corp posted its fifth straight monthly drop as sales declined 26% in June with U.S. light vehicle sales coming down to 407,513 cars and trucks. Total vehicle sales fell 25.9% to 413,473 units from 558,092 units a year ago. Car sales fell 2.3% to 171,494, while light truck sales fell 37.1% to 236,019. GM said its Q3 North America production forecast remained unchanged at 1.05 million vehicles. 5yr default in the company's trading arm GMAC, also made a decline in the tune of 10 bps, eventually leading to a closing mid of 250 on Monday vs Friday's close of 260. In the technology sector Motorola Inc said it has completed the sale of its automotive electronics business to Continental AG for USD1bln. Motorola said its previous Q2 revenue forecast of USD10.3bln to USD10.5bln included USD400mln in sales from the business, but that its Q2 results, to be released July 19, will not include those sales. 5yr default in the company finished with a mid of 30 on Monday.

Andre Hinckson



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