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USD CDS Summary - HPQ excels in the Q3 & plans a buyback
Informa Global Markets - CDS Morning Insight (US) (August 17, 2006)

In the technology sector on Wednesday, Hewlett-Packard Co reported a fiscal Q3 profit of USD1.38bln, propelled by strong sales in the company's printing and personal-computer businesses. One year Prior to the latest rise in profit, HP earned USD73mln in the Q3. Meanwhile revenue rose 5.2%, to USD21.89bln from last year's USD20.8bln, and the company said it generated a whopping USD2.6bln in free cash flow. In addition HP also announced plans to buy back as much as USD6bln of its stock. 5yr default in HP, saw some trading earlier in the session at 20 before tightening late, to a market of 17/20 (D/D -4 bps)on Wednesday.

In retail Jones Apparel Group Inc said its board has decided not to pursue a sale of the company, as it will continue executing on the company's strategic business plan. After tightening -40 bps to a closing market of 125/135 on Tuesday, the clothing company could still be seen tightening another -20 bps on the day to a closing market of 108/112 on Wednesday. The company saw trading a few times in the session at 125 and as low as 111. Limited Brands Inc turned in a 39% increase in Q2 earnings late Wednesday as sales of established brands rose. Net income climbed to USD113.1mln, from USD81.5mln a year earlier, while sales rose 7.1% to USD2.45bln. 5yr default in the company ended with a market of 57/63 (D/D -6 bps).

In the industrial sector 5yr default in Cooper Tire & Rubber Co reversed from its widening ways to a closing market of 519/523 (D/D -20 bps).

Again supply the noise in the auto sector was default in Ford Motor Credit, which traded at 380 and 375 on Wednesday, coming down to a closing market of 370/375 (D/D -10 bps). Workers at Ford Motor Co. are bracing for a new round of layoffs, benefits cuts and factory closures, with white-collar workers particularly nervous, according to a published report. 5yr default in the company could still be seen tightening slightly, ending with a market of 645/651 on Tuesday (D/D -7 bps). Making a marginal turn wider was default in GMCO, which finished with a market of 650/655 (D/D +2.5 bps), after trading late in the session at 650. 5yr default in GMAC took the tightening route on Wednesday, finishing with a market of 200/209 (D/D -7 bps). The company's 5yr default saw trading at 210 and 207, on its way down to a tight close on Wednesday.

Andre Hinckson



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