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USD CDS Summary - Ford still looking for a savior
Informa Global Markets - CDS Morning Insight (US) (August 24, 2006)

Early in the session on Wednesday news broke that Bill Ford Jr., head of Ford Motor Co. , reportedly called Carlos Ghosn, the chief executive of Renault-Nissan, and said Ford was interested in joining the Renault-Nissan alliance if talks with General Motors Corp didn't work out, The Wall Street Journal reported. The news helped ease FMCO's widening ways on Wednesday, as the company's 5yr default tightened -15 bps on the day to a closing market of 701/709, after trading late in the session at 710 before moving tighter to the close. 5yr default in Ford Motor Credit finished by making a marginal move tighter, closing with a market of 395/405 (D/D -5.5 bps). Default in GMCO was quiet towards the close as it ended with a market of 645/655 (D/D +5 bps). GMCO traded a few times on Wednesday within a range of 645 and 650. Meanwhile default in parts maker names such as Lear Corp, Visteon Corp, and ArvinMeritor all made marginal moves on the day, after surging wide for most of the week. 5yr default in Lear finished with a mid of 555 on Wednesday vs. Tuesday close of 550, while default in ArvinMeritor closed with a market of 420/430 (D/D +5 bps). Making the lone tightening move in the aforementioned names was 5yr default in Visteon which pulled in -5 bps to a closing market of 440/470 (D/D -5 bps).

Elsewhere Forest products giant Weyerhaeuser Co. announced that it will be combining its fine-paper business with Canadian paper maker Domtar Inc., in a deal the companies valued at about USD3.3bln. The agreement allows Weyerhaeuser to focus on areas that could have more growth potential, and gives Domtar the heft it could need to be more competitive. 5yr default in Weyerhaeuser Co traded at 59 earlier in the session, before making its way down to a closing market of 52/56 (D/D +9 bps).

Also in the industrials sector Anadarko Petroleum Corp. announced its acquisition of Western Gas Resources Inc. for USD4.8bln in cash. On the heels of the merger Standard & Poor's Ratings downgraded Anadarko Petroleum Corp.'s corporate credit rating to BBB from BBB+. The agency said that the downgrade reflects Anadarko's highly leveraged financial profile following USD23bln in initially debt-funded acquisitions. 5yr default in the Anadarko closed with a market of 44/49 which is only a D/D change of +2.5 bps. 5yr default in Abitibi-Consolidated Inc closed at 462/470 (D/D -18 bps).

Andre Hinckson



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