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EUR CDS Flow - Unity Media falls after Bundesliga agreement
Informa Global Markets - Bondwatch Morning Insight (Europe) (February 9, 2007)

The CDS single name universe was broadly unchanged if a little tighter on Thursday despite weaker European equities with both the BoE and ECB holding rates at current levels.

The biggest mover of the day came from Unity Media following an announcement from German pay-TV company Premiere AG that it has agreed to give rival operator Unity Media"s Arena channel a 16.7% stake in the company in exchange for the right to distribute and market the Bundesliga football channel. 5Y CDS on Unity Media dropped 70bp to 366/392.

Elsewhere 5Y CDS on FKI moved 10bp wider but retracted slightly to be at 130/140 (+5bp D/D) after Moody"s downgraded the company"s long-term rating to Ba2 neg from Ba1. Invensys tightened 15bp to 100/110 after the release of its Q3 figures, which showed a profit, reflecting the company"s gradual recovery from near bankruptcy three years ago. Note however shares in Invensys fell by 3.74% on Wednesday's close after the company said that US orders for controls declined adding that these should pick up later in the year. Also moving tighter was 5Y CDS on Degussa which was at 63/68 (-4) after the German government late on Wednesday brokered a deal to end subsidies to coal miners by 2018, thus ensuring that Degussa"s parent company RAG AG can go ahead with its IPO. Trade was also seen on Grohe at 400 in a market of 395/410 (-25) and on ONO Finance at 285 last offered at 295 (-18bp).

Sainsbury's could not stay out of the news for too long and this time it was fellow retailer Marks & Spencer that was reported to be considering an approach. 5Y CDS on Sainsbury tightened to 79/84 (-11), with trade seen at 80, whilst 5Y CDS on M&S was 1bp wider at 29/31. Elsewhere in the Consumer sector 5Y CDS on Imperial Tobacco was 1bp tighter at 35/37 with trade seen at the extremes of 38 and 34, after it announced that it had agreed to acquire US counterpart Commonwealth Brands for USD 1.9bln. 5Y CDS on Unilever was flat at 16.5/17.5, with trade seen at 18 and shares lost 2.8% on yesterday"s close as Q4 revenue growth missed estimates.



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