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CDS Flow Summary - Mixed results in Ford,GM lead to CDS play
Informa Global Markets - CDS Morning Insight (US) (October 4, 2006)

The big auto names had mixed sales results, which led to some mixed CDS play. Though the majority of the market had expected General Motors to see flat sales and some even softer than its 6.8% drop in total vehicles or 3.1% slip in light vehicles, its CDS, for the most part, held up. Ford, which had banner results at a rise of 4.7%, was somewhat better than expected. Ford's fleet sales rose 4%. It even instituted low interest financing on 2006 and 2007 pickup trucks to increase financing. Yet default in Ford Motor Co eased to 668/678 from 680/690 and default in Ford Motor Credit tightened to 363/368 from 370/377. GM's CDS finished wider at 540/550 from 535/545 Monday but dealers did not see much worry or concern in the sector. Financial arm GMAC eased to 173/176 from 175/180.

But more pressing on the market overall today was the record DJIA close at 11,727.34, owing to a supply glut that sank the price of oil to below USD59 a barrel. Parts makers mostly moved in tandem with the equities market as opposed to being hostage to Ford and GM sales news. Lear, for one, eased to 545/555 from 570/580. Visteon was unchanged at 470/480. ArvinMeritor was at 460/485 from 470/480. American Axle was at 420/435 from bids at 415. Goodyear Tire was left at 365/385 from 360/380.

Energy firms were on the active list today with oil causing such a rally in equities. Centerpoint Energy was at 45/50 from 45/55.

In aerospace, Boeing Capital widened 1 bp to 12/13 on news that Airbus SAS postponed deliveries of its superjumbo A380 jet.

In sporadic moves, publishing firm Primedia eased to 440/480 from 510/530. The firm last week was rumored to be delaying plans to file to spin off some of its divisions. After doing some spinning off itself, Cendant was active at 115/128 from 115/127. LBO Candidate Harrah's Entertainment's Harrah's Operating saw default a touch wider at 270/275, out from 265/270, continuing its spread extension.

Kathleen Fitzpatrick Hoffelder



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