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USD CDS Summary: Levi Strauss doubles up in the Q2
Andre Hinckson, Informa Global Markets - CDS Morning Insight (US) (July 12, 2006)

In the session on Tuesday the privately-held jeans maker Levi Strauss & Co. reported a 50% improvement in Q2 net income to USD40.2mln, which was helped by a USD32mln tax benefit, with revenue down 1% to USD953mln. In an SEC filing the company reported a 5% improvement in North American revenue and a 4% increase in Asian revenue, but a 17% drop in European revenue. 5yr default in the company was last seen trading at 400 but have since moved wider to a closing market on Monday of 400/430.

The world's number one producer of Pepsi-Cola beverages, reported flat Q2 net income on 10% higher revenue. The stronger than expected net was USD148mln, or 61 cents per share, against USD148mln, or 59 cents, in the year-earlier period, while revenue reached USD3.14bln from USD2.86bln. 5yr default in the company finished with a market of 11/13 on Tuesday.

In the industrial sector Xstrata Plc's is trying to throw a wrench in Phelps Dodge Corp's plans to acquire both Falconbridge & Inco Ltd. Xstrata Plc's increased its bid for Falconbridge Ltd given the attractiveness of the company's assets. Xstrata, a Swiss mining group, lifted its offer for all of the shares of the Canadian nickel miner Falconbridge it doesn't already own to USD16.2bln or (CAD18.1bln) in cash. Phelps Dodge last saw trading at 49 earlier in the session while its 5yr CDS widened to a closing market of 47/57. 5yr default in Falconbridge closed with a mid of 64, while 5yr CDS in Inco Ltd finished on Tuesday with a mid of 65. Technology stocks picked up where they left off in the previous session Tuesday, as the sector opened in the red.

A revenue warning from Lucent Technologies led investors to question the quality of earnings that are about to come pouring out of the tech sector. Lucent said it sees Q3 per-share income of 2 cents, compared with 7 cents in the year-ago quarter. Regarding the declines, the company cited lower sales to North American mobility customers, as well as decreased revenues in China. In addition the company said it has agreed to merge with Alcatel. Lucent last traded at 135 on 06-Jun, and closed on Tuesday with a market of 130/138.

In the auto sector General Motors Corp, said it will invest USD240mln to start producing a new small car in Brazil, which is part of an effort to boost domestic sales and offset a slowdown in exports. Also Shanghai Automotive Co said it will buy its parent's stakes in the Chinese ventures of General Motors Corp and Volkswagen AG from SAIC Motor Co, which will more than double its assets and profit after the purchase. 5yr default in GMAC finished marginally wider on the day with a closing mid of 250, which is up from Monday's close of 250. GMAC traded late in the session a 255. Ford Motor Credit finished a half basis point wider with a mid of 472.5 vs. Monday's close of 472.

Andre Hinckson



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