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CDS Flow Summary - Ford's convertible prompts 10yr CDS trade
Informa Global Markets - CDS Morning Insight (US) (December 6, 2006)

While most auto names are basking in improved auto sentiment, Ford Motor Co is still seeing some protection buyers. A hefty convertible offering to the tune of USD3bln was behind the protection buying today as the convertible, which is due to price tomorrow, is bringing out hedging needs. The convertible has puts in years 10 and 20, which has caused a round of protection buying in Ford Motor 10y CDS at 585. Five-year CDS in the auto concern is tighter by a hair today at 520/530 (D/D in 2bps). Default in Ford Motor Credit tightened to 276/280 from 290. The deal was not exactly positive for equity holders as its share price sold off more than 2% to USD7.68.

GMAC, meanwhile, also arrived with a financing structure with a USD2.9bln CARAT auto ABS deal still yet to price. GMAC CDS tightened, nevertheless, to 100/104, in from 108/113. General Motors eased from 400 to 393 for a mid. Other auto related names also tightened as parts maker Cooper Tire eased to 290/300 from 310. Hertz tightened to 180/190 from 190/200.

In TMT, Eastman Kodak continued its ride inward today with levels seen at 170/178 from 180/188. Time Warner, meanwhile, was at 31/34 as its firm's cable unit tripled its commercial paper program Monday. Another active mover lately-- Interpublic Group-- tightened to 175/185 from 185/195. It continues to benefit as its takeover talks are lessened with smaller rival Publicis. In high yield TMT, EchoStar Communications has widened in default in recent days from 155 to 165 today, but it is not particularly affected by what could amount to impending litigation over offering local stations from distant markets, dealers say. Its questionable merger with DirecTV is also high on traders' agendas. Default in DirecTV was at 175.

Elsewhere, some slight spread extension occurred in leading REIT Equity Office Properties, which pushed out 2 basis points to 45. Drug firm Boston Scientific had it ratings cut by S&P to BBB from BBB+, citing stents as clouding revenue. Default was left at 59/63 from 46/50.

Kathleen Fitzpatrick Hoffelder



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