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USD CDS Summary - GM & Ford continue to take blows in sales
Informa Global Markets - CDS Morning Insight (US) (August 2, 2006)

There were no surprises in the auto sector on Tuesday as General Motors Corp and Ford Motor Corp both reported declines in U.S. auto sales. GM could be seen posting a 22.5% decline in July U.S. light vehicle sales to 406,298 cars and trucks from 524,218 during the employee pricing promotions a year ago. Meanwhile Ford took a harder hit as the company's U.S. auto sales declined 34.2% to 241,339 cars and trucks, down from 366,548 a year ago when the automaker rode heavy demand from its employee pricing promotions. Both vehicle manufactures continued to blame rising fuel prices for the decline in sales.

5yr default in GMCO was busy throughout the session on Tuesday, as it traded down from Monday's close of 710/720, to mid points of 713, 710, and 705 eventually making its way down 25 bps to a closing market of 685/695. 5yr default in GMAC followed the tightening trend in, 10.5 bps to a closing market of 215/219 on Tuesday, while 5yr default in Ford Motor Credit tightened 15.5 bps to a closing market of 434/436, after seeing trade earlier in the session at 443. FMCO saw its 5yr default finish with a tight market of 790/810 on Tuesday, which is a 22.5 bps slide from Monday's close of 820/825. U.S. parts maker Visteon Corp reported a profit on Tuesday as it earned USD50mln in the Q2, after a loss of USD1.2bln, in the same period a year ago. Visteon saw its sales fall to USD3bln from last years Q2 report of USD5bln. 5yr default in the company traded at 670 earlier in the session but has since pulled out to a closing market of 670/685 on Tuesday.

In the industrial sector International Paper could be seen completing the previously announced USD1.4bln sale of its coated and supercalendered papers business to CMP Holdings LLC. International Paper also reported a rise in Q2 net income to USD115mln, which is up from the previous year's earnings of USD77mln. The company also saw sales rise 7% in the Q2, to USD6.27bln vs. last year's Q2 of USD5.86bln. 5yr default in the company saw trading at 52.5, earlier in the session but has since tightened up to a market of 49/54 on Tuesday.

In the technology sector Eastman Kodak Co said its Q2 loss widened, amid weakness in its film and photofinishing systems group and consumer digital imaging. For the three months ended June 30, it lost USD282mln, which is compared to a loss of USD155mln, while net sales also took a hit and fell to USD3.36bln from USD3.69bln. Kodak said it continues to implement its restructuring plan and expects that job cuts to be within the range of 25,000 to 27,000 positions. 5yr default in the company closed with a mid of 270 on Monday, but has surged out 25 bps on Tuesday with a closing mid of 295.

Andre Hinckson



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