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CDS Flow Summary - Auto benchmarks go against expectations
Informa Global Markets - CDS Morning Insight (US) (March 21, 2007)

With new series 8 taking the reigns on Tuesday, the expectations of the single-names benchmarks going tight by CDS dealers were misguided as the U.S. benchmark names all ran wider on the day. With hopes to reduce gasoline consumption by 20% in the next 10 years, by boosting fuel economy standards and providing incentives for the use of alternative fuels, President George W. Bush today made a round robin tour of General Motors Fairfax assembly plant and Ford Motor Co.'s Kansas City assembly plant to give a speech about his energy initiatives. Meanwhile in another effort to boost sales GM said it plans to bring back its 'Super' line of Buicks, about five decades after the premium models last were sold, as it makes broader efforts to reinvigorate the 104-year-old brand in the U.S. and grow in China. 5Y default in GMCO could be seen tightening to a market of 440/460 on Monday, but after the roll widened out +16 bps to close with a market of 462/470. GMCO saw trading levels of 462.5 and 465 during the day. After trading at 175 earlier in the session on Tuesday 5Y default in GMAC pushed out another +5 bps to a closing market of 178/182. Default in FMCO was left at 620/630 out from Monday's close of 610/620, while 5Y FMCC finished +7.5 bps wider with a market of 340/345.

Parts maker Lear Corp saw its board vote in favor of a buyout offer by a group affiliated with billionaire investor Carl Icahn for about USD2.8bln, while some stockholder opposition to the deal remains. 5Y default in Lear widened to a market of 400/410 which is out from 380/400.

One of the world's largest processors of oilseeds, corn, and wheat, Archer Daniels Midland Co saw its default bump out +12 bps to a market of 27/31 because of a rumored LBO interest. Trading occurred at 20 & 25 throughout the day. In the consumer sector Sara Lee said it would eliminate 11 management positions in its international segment. The new structure will be implemented by December 2007. The company said the changes are meant to better align its international management structure with its plan to move Sara Lee closer to becoming an integrated operating company. 5Y default in the company moved outward to a closing market of 35/38 (D/D +1.5 bps). Meanwhile default in Kraft Foods finished at 23/28, out from 19/22.

Andre Hinckson



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