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EUR CDS Flow - Vodafone wider after Hutchinson bid talk
Informa Global Markets - Bondwatch Morning Insight (Europe) (December 22, 2006)

As expected Thursday proved to be a slow day in single name CDS trading. Levels remained broadly unchanged amongst low volumes and it was left up to three or four companies to provide colour in the market.

In the TMT sector 5Y CDS on UK mobile operator Vodafone moved 1bp wider to 24/27 after reports that it was considering a potential USD 13.5bln takeover bid for India's Hutchinson Essar. The share price fell 2.7% on yesterday's close to 142p. Elsewhere 5Y CDS on Publicis remained unchanged at 36/39 after news that it had agreed to acquire US online professional services group Digitas for USD 1.3bln in cash. Note that Moody's later affirmed the Baa2 senior unsecured debt ratings of Publicis. Elsewhere 5Y CDS on BT was at 47/51 (+2bp D/D), with trade seen at 50.

The Energy sector again provided a steady flow of news. 5Y CDS on French utility Suez was seen trading at 19 after Le Figaro reported that Pinault was mulling a fresh approach, adding to speculation surrounding the fate of Suez's merger with GdF. 5Y CDS on GdF and Suez finished unchanged at 10/12 and 17/20 respectively and 5Y CDS on Pinault was also unchanged at 47/50. In other news the UK environment subsidiary of Suez, SITA UK, won a EUR 1.5bln PFI contract from the County of Northumberland to supply waste management services. Suez also announced that it had acquired a 59.6% stake in Societe Hydro-Electrique du Midi for EUR 504.5mln. Elsewhere in the sector, reports that Endesa had asked Spain's energy regulator to investigate the planned purchase of UK counterpart Scottish Power by Iberdrola, left CDS levels unchanged. 5Y CDS on Endesa was at 17/20, Iberdrola was at 21/24 and Scottish Power was at 16/19.

Elsewhere in the single name world trade was noted on 5Y CDS on Rexam was unchanged at 45/51, with trade seen at 49



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