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CDS Flow Summary - Sabre books more losses in default
Informa Global Markets - CDS Morning Insight (US) (December 13, 2006)

Travel booking firm Sabre Holdings blew out further in default today as the rumored private equity bids proved to be more than rumors. Sabre signed on the dotted line to be bought for a hefty USD4.45bln by Texas Pacific Group and Silver Lake Partners. Both ratings agencies weighed in hard on the news seeing the move as increasing financial leverage and seeing a potential multiple notch downgrade for its existing USD800mln notes. Default in Sabre extended further today to 315/344 from its 177 bp widening Monday at 277/280. Shares of the firm rose another 5% to USD31.96, on top of a 10% rise Monday.

LBO news aside, the auto sector again stole headlines as GMAC priced a USD1bln 5yr bond via BAS, Citi and JPM, according to sister service IGM CorporateWatch. Hedging for GMAC's 5-year bond in the CDS market was not as prevalent as in Ford Motor Credit's USD3bln 2-part bond Monday featuring 5y FRNs and 10y bonds. After the pricing of that deal, which priced cheap at 8.25% for the 10s, it provided some impetus for participants to buy protection, which pushed out its CDS Tuesday. Levels in Ford Motor Credit were left at 297/300 from 285/290, while default in Ford Motor Co widened to 560 from 540/545. Default in GMAC finished wider at 113/117 from 110/113, while default in General Motors extended to a mid of 415 from 405/410. Parts maker Cooper Tire edged outward today as well to 315/325 from 305/315.

Other CDS movement occurred in Level 3 Communications, which saw markets at 430/435, in from 460/465. The firm is performing better in default since its largest shareholder, Southeastern Asset Management, upped its investment in the firm. DirecTV also had interest today with default at 176/180. The firm's possible merger with EchoStar is still under discussion as is a potential sale to Liberty Media, which is seen as giving up more control. Default in Liberty Media tightened to 148/152 from 158/162.

In other movers, ahead of earnings to be released out of Dynegy Wednesday, default in the energy firm was at 223/238, in from 221/234. Diamond Offshore was left wider at 42/52 from 36/39. Potential takeover name Ingersoll-Rand widened in default to 27/31 from 25/30.

Kathleen Fitzpatrick Hoffelder



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