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CDS Flow Summary - Lousiana-Pacific CDS jumps again on bid
Informa Global Markets - CDS Morning Insight (US) (November 29, 2006)

The rumor that wood product firm Louisiana-Pacific was entertaining a bid from Weyerhaeuser again managed to jolt the default of both firms, though they moved in opposite directions. Weyerhaeuser was first cited as putting its hand in the ring for Louisiana-Pacific in March as cited on IGM CDS Insight. The news tightened its CDS then and tightened it again today.

Louisiana-Pacific, which has been hit hard in the third quarter due to poor demand for building products, is ripe for a takeover. Such a union between Weyerhaeuser and Louisiana-Pacific would be a boon for the strand board maker, while it could put a strain on Weyerhaeuser. Default in Weyerhaeuser, though, has been relatively stable even amid the earlier rumors. Today's resurfacing of the bid for Louisiana-Pacific prompted default in Weyerhaeuser to widen to 50/52 from 46/50 at the start of the session. Earlier, default in Weyerhaeuser had been as wide as 50/55. Louisiana-Pacific CDS, meanwhile, narrowed from 130/140 to 110 and back to a close of 120/130.

Another active mover today in default is Eastman Kodak. The photographic concern has been active all week in default, leaving markets wide at 205/210, out from a late close of 192 Monday. Cosmetic sales firm Avon Products edged outward today in default to 21/25 from 20/23. Its CDS has also jumped in recent weeks on the speculation that an LBO was likely for the firm.

GMAC continued to ride high from its upgrade and tighten further in default. Levels were left at 128/132, in from 135/138. General Motors eased to 425/435 from 430/440. Ford Motor Co, on the heels of its USD18bln borrowing, stretched wider midday but eased back to 568/578, out from 567/570. Ford Motor Credit ended unchanged at 338/343. Ford had to wrestle with its employees' decision on whether or not to take a buyout. The firm also touted a smaller version of its Ford Focus car today. Parts maker Cooper Tire extended to 335/340 from 315/320. Goodyear Tire widened to 340/352 from 320/340 amid union pressures. It has yet to settle its case with the United Steelworkers of America.

Satellite firm EchoStar widened to a 150/160 from 145/155. Intelsat stretched to 405/410 from 195/200.A bond issue out of Cox Communications, meanwhile, did not do much to shake the default in this stable name. The firm brought a USD1bln 2-part 10- and 30-year bond. 5y CDS was left relatively stable at 33/37.

Kathleen Fitzpatrick Hoffelder



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