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CDS Flow Summary - FDIC OK of GMAC bank transfer eases CDS
Informa Global Markets - CDS Morning Insight (US) (November 16, 2006)

Just when it looked like auto giant General Motors' financial arm GMAC could not go any tighter in default, the Federal Deposit Insurance Corp was likely to soon approve the transfer of GMAC's bank charter to Cerberus Capital Management, and then did, sent its CDS inward. With the FDIC approval, the takeover is on target for its planned November 30th date and enables it to secure a special exemption that was holding up the deal. Five-year CDS trade occurred in size at 125 basis points then down to 122/123. Markets were left at 120/123, in from 122/125. General Motors itself tightened to 385/395, in from 400/407.

Similar tightening moves occurred in Ford Motor Co, with default left at 510/520 from 523/533, while default in Ford Motor Credit eased to 315/320 from 322/326. The arrival and hedging of Ford's USD3bln auto ABS offering helped its CDS to tighten. Parts makers also eased with ArvinMeritor at 310/315, while Lear was at 330/345. American Axle was at 300/335 from 330/340.

Other buyout/merger deals held up by regulators also accounted for default swap moves. Lucent was at 117/127 as its deal was likely to be approved with Alcatel, though post 9/11 security measures remain a challenge for the firm in uniting with France's Alcatel. A USD 10-year bond issue out of Sprint Nextel accounted for 7y CDS to be bid at 60.

Names that were active earlier in the week were again seeing interest as Tyson default was at 110/118, out from the 113 bp mark seen earlier in the week after its favorable forecast for products and ventures. Takeover name Clear Channel had markets at 285/305 from 290/305 as Texas Pacific was noted as dropping out of the bid for the firm in taking the company private. Alltel, meanwhile, was at 52/54 from 46.

In other CDS moves, Gap Inc widened to 105/115 from 100/110 as the firm starts the beginning of the US shopping season disadvantaged by compared to more luxury retailers. JC Penney was at 34/39 from 37/39.

Kathleen Fitzpatrick Hoffelder



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