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CDS Flow Summary - Ford, Cendant buck long dated CDS selling
Informa Global Markets - CDS Morning Insight (US) (September 13, 2006)

Troubled Ford Motor Co is now trading quite separately from the rest of the default market. A stellar performance in the equities markets gave a helping hand to tightening default in most names. But rumors of UAW talks with Ford over its new planned cuts and some failed negotiations at Delphi combined to widen Ford's default. Five-year markets in Ford Motor Credit were left at 328/333, out from 318/323, while Ford Motor Co was at 595/600 from 593/603.

Former travel firm Cendant also bucked the rest of the market by widening in default, particularly the sellers of long dated protection visible in the market today. Its CDS extended to 104/108 from 87/91. A short base was growing in the name even while its CDS was in the 70s. A few buyers of protection kept that level as a floor, dealers say. But it has since blown to 80 bps and now the 100 bps as it is still up in the air over whether the firm, now Avis Budget Group, will be sold. Cendant head Ron Nelson, however, does not see a sale just yet.

Homebuilder Centex eased to 57/61 from 58/62. The move comes a day after Centex had its ratings affirmed by Fitch. Supermarket Kroger, meanwhile, eased to 40/43 for 5y default from 41/46 basis points as it reiterated its forecast of USD1.39 to USD1.41 a share for the year ending in February and upped its forecast for same store sales growth to 4.9% from 4.5%. A bond issue for independent oil firm Anadarko contributed to the tightening mix. Its 5yr CDS eased to 37/41 from 39/43. The firm is due with a USD5bln 3-part bond featuring 10s and 30s.

Banks also jumped on the tightening bandwagon, helped by robust earnings out of Goldman Sachs. Earnings at GS surpassed analyst estimates by a long shot as its net income slipped less than expected and at USD3.26 a share beat estimates of USD2.97 a share. 5y USD CDS eased to 21/23 from 21/24 basis points. Elsewhere, a pair of CEO roastings at both Bristol-Myers and Hewlett-Packard led to a slight tightening in the former's default and a slight widening in the latter. Five-year CDS at Bristol-Myers was at 13.5/15.5, in from 14/17 as CEO Peter Dolan quit after being unable to stop a generic version of its Plavix heart pill off the market. Hewlett-Packard Chairwoman Patricia Dunn said she will step down over the tactics used in the investigation of leaks to the press. She will be replaced by CEO Mark Hurd. 5y HP default was left wider at 18/21.

Kathleen Fitzpatrick Hoffelder



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