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EURO CORP-CDS spreads widen, demand good for cash EDF bonds
Reuters: [2008-05-23 17:04:00]
By Jane Baird
LONDON, May 23 (Reuters) - European credit spreads widened on Friday, extending a market decline kicked off by surging oil prices, after the investment grade index broke through a technical resistance level, an analyst said.
In the cash bond market, meanwhile, strong demand enabled French utility EDF <EDF.PA> to tighten guidance on two bonds and add a third to a planned sale.
By 1436 GMT, the investment-grade Markit iTraxx Europe index <ITRAC5EA=GFI> was at 86.5 basis points, according to data from Markit, 7.5 basis points wider versus late on Thursday.
The index had been trading in a range between 60 and 80 basis points through the month, said Maureen Schuller, a debt strategist at ING in Amsterdam. "When the index broke though the 80 level, it tended to widen further, faster," she said.
Thin trading ahead of Monday holidays in both Britain and the United States tended to reinforce the technical move, she said.
Since late on Monday, the Europe index has widened by 23.5 basis points as oil prices have risen to records and as the U.S. Federal Reserve forecast cut its forecast for growth and warned of higher inflation.
"The main driver has been the oil price rise this week," Schuller said.
The Markit iTraxx Crossover index <ITCRS5EA=GFI>, made up of 50 mostly "junk"-rated credits, was at 470 basis points, 35 basis points wider. The index has widened by 78 basis points since late on Monday.
Friday's data on euro zone economic growth and U.S. home sales confirmed fears of an economic slowdown at the same time.
Existing U.S. home sales fell 1 percent in April, although the figure came in at the high end of expectations.
Inventories of unsold homes surged to 11.2 months worth at the current pace of sales, the highest level since the National Association of Realtors began tracking single family and condo properties together in 1999.
In Europe, the purchasing managers index for service companies fell in May by more than expected to match a 4-1/2-year low reached in January as a strong euro and high oil prices hurt companies' margins.
EDF SEES STRONG DEMAND
As for cash bonds, the EDF bond sale indicated the market was holding up better than the derivatives market.
The French power company cut guidance on planned six-year and 12-year euro bonds and added a third 20-year sterling bond.
"If there is a substantial move wider or tighter, the CDS market typically changes ahead of the cash markets," Schuller said.
The EDF bond sale was the second of the year for the power company, following a 1.5 billion euro 10-year bond it priced on Jan. 18 at mid-swaps plus 70 basis points.
Guidance on the Friday deal was tighter by comparison at 68 to 69 basis points for a 12-year bond. At the same time, the investment-grade Europe index was wider versus a range on Jan. 18 of 72 to 75 basis points. (Editing by Sue Thomas) ((jane.baird@reuters.com; +44 207 542 2471; Reuters Messaging: jane.baird.reuters.com@reuters.net))
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Keywords: MARKETS BONDS EUROCORP/
Forward Calendar - U.S. corporate bond new issues
Reuters: [2008-05-23 14:52:00]
May 23 (Reuters) - The following are lists of upcoming high-grade and
high-yield corporate bond offerings in the United States. The information was
gathered from IGM CorporateWatch, and other market sources:
*Denotes 144a private placement debt offering.
HIGH-GRADE BOND SALES EXPECTED FOR WEEK OF 5/19/2008
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
Amer Express Crdt $900 mln 2-yr frn Aa3/A+/A+ BARC/BNP/DB 5/20
Amgen Inc $500 mln 10-yr A3/A+/A GS/ML 5/21
Amgen Inc $500 mln 30-yr A3/A+/A GS/ML 5/21
*ArcelorMittal $1.5 bln 5-yr Baa2/BBB+/BBB GS/JPM/HSBC 5/19
*ArcelorMittal $1.5 bln 10-yr Baa2/BBB+/BBB GS/JPM/HSBC 5/19
Bank of America $2.7 bln preferred A1/A+/AA- BAS 5/20
Baxter Int'l $500 mln 10-yr A3/A+/A GS/JPM 5/19
Conn Pwr & Light $300 mln 10-yr A3/BBB+/A- BARC/CITI/WB 5/19
Genworth Fin $600 mln 10-yr A2/A/A+ MS/DB/UBS 5/19
HSBC Hldgs Plc $1.5 bln 30-yr Aa3/A+/AA- HSBC 5/19
ILFC $750 mln 5.5-yr A1/A+/A BARC/BNP/LEH/ML 5/21
ING USA Funding $1.25 bln extendible Aa3/AA/NA HSBC/GS/MS 5/21
Kraft Foods $1.25 bln 10-yr Baa2/BBB+/BBB GS/CS/HSBC 5/19
Kraft Foods $750 mln 30-yr Baa2/BBB+/BBB GS/CS/HSBC 5/19
Lexmark Int'l $350 mln 5-yr Baa2/BBB/NA CITI/JPM 5/19
Lexmark Int'l $350 mln 10-yr Baa2/BBB/NA CITI/JPM 5/19
Northwest Pipe $250 mln 10-yr Baa2/BBB-/BBB BAS/BNP/RBGSC 5/19
PartnerRe $250 mln 10 yr A1/A/A+ CS/WB 5/21
Pepsico $1.75 bln 10-yr Aa2/A+/AA- JPM/ML/MS 5/19
Public Svc of NH $110 mln 10-yr Baa1/BBB+/BBB+ BARC/BKNY 5/19
Rosslekhozbank $750 ml 5-yr Baa2/BBB+/NA ABS/C/GS 5/21
Rosslekhozbank $1.0 bln 10-yr Baa2/BBB+/NA ABS/C/GS 5/21
*Transcont Gas $250 mln 10-yr Baa2/BBB-/BBB BAS/JPM/RBSGC 5/19
Veolia Environ. $700 mln 5-yr A3/BBB+/NA BAS/CS/DB/ML 5/21
Veolia Environ. $700 mln 10-yr A3/BBB+/NA BAS/CS/DB/ML 5/21
Veolia Environ. $400 mln 10-yr A3/BBB+/NA BAS/CS/DB/ML 5/21
------------------------------------------------------------------------------
SPLIT-RATED BOND SALES EXPECTED FOR WEEK OF 5/19/2008
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
Liberty Mutual Gr $1.25 bln 50-yr hyb Baa3/BB+/BBB- CITI/BAC/JPM 5/21
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CONVERTIBLE BOND SALES EXPECTED FOR WEEK OF 5/19/2008
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
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HIGH-YIELD BOND SALES EXPECTED FOR WEEK OF 5/19/2008
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
Chesapeake Engy $800 mln 10.5-yr Ba3/BB-/NA CS/BAS/LEH/DB/RBSGC 5/20
EchoStar DBS $750 mln 7-yr Ba3/BB-/NA CS 5/20
El Paso Corp $600 mln 10-yr Ba3/BB-/NA DB/GS/JPM 5/22
Forest Oil $250 mln 10-yr B1/B+/NA BAS/BNP/CS/DB/JPM 5/19
Nortel Networks $675 mln 10-yr B3/B-/NA JPM/CITI 5/21
Plains Explor. $400 mln 10-yr B1/BB/NA JPM/BAS/LEH/ML 5/20
------------------------------------------------------------------------------
UPCOMING DEALS
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
------------------------------------------------------------------------------
PREVIOUS HIGH-GRADE BOND SALES
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
ACE INA Holdings $450 mln 7-yr A3/A-/A CITI/JPM/WB 5/12
*AIG $4.0 bln 60-yr Aa3/A/A+ CITI/JPM 5/13
BJ Services $250 mln 10-yr Baa1/BBB+/NA CITI/ML 5/14
Canadian Pac Rail $400 mln 5-yr Baa3/BBB/NA MS/RBC 5/14
Canadian Pac Rail $300 mln 10-yr Baa3/BBB/NA MS/RBC 5/14
Centerpoint Engy $300 mln 10-yr Baa3/BBB/BBB BARC/CS/LEH 5/12
Deutsche Bk (Lon) $2.5 bln 5-yr Aa1/AA/NA 5/15
Eaton Corp $300 mln 5-yr A2/A/A CITI/JPM/MS 5/15
Eaton Corp $450 mln 10-yr A2/A/A CITI/JPM/MS 5/15
*Entergy Gulf $375 mln 10-yr Baa3/BBB+/BBB MS/RBS/MIZ 5/12
*Harley David Fnd $1.0 bln 10-yr A1/A/A+ CITI/JPM 5/15
*HBOs Plc $2.0 bln 10-yr Aa3/A+/AA GS/LEH/MS 5/15
Istar Financial $750 mln 5-yr Baa2/BBB/BBB BAS/CITI/JPM 5/16
JP Morgan $2.5 bln 30-yr Aa2/AA-/AA- JPM 5/16
NiSource Finance $TBA 5-yr Baa3/BBB-/BBB- BAS/JPM/WB 5/15
NiSource Finance $TBA 10-yr Baa3/BBB-/BBB- BAS/JPM/WB 5/15
Parker-Hannifin $450 mln 10-yr A2/A/A BAS/GS/MS 5/13
Parker-Hannifin $325 mln 20-yr A2/A/A BAS/GS/MS 5/13
Petro Canada $600 mln 10-yr Baa2/BBB/NA CITI/DB/HSBC 5/12
Petro Canada $900 mln 30-yr Baa2/BBB/NA CITI/DB/HSBC 5/12
Philip Morris $2.0 bln 5-yr A2/A/A+ CS/DB/LEH 5/13
Philip Morris $2.5 bln 10-yr A2/A/A+ CS/DB/LEH 5/13
Philip Morris $1.5 bln 30-yr A2/A/A+ CS/DB/LEH 4/13
Simon Property $700 mln 5-yr A3/A-/A- BAS/CITI/DB/GS 5/12
Simon Property $800 mln 10-yr A3/A-/A- BAS/CITI/DB/GS 5/12
Sovereign Bank $500 mln 10-yr Baa1/BBB/BBB- LEH 5/13
Tampa Electric $150 mln 10-yr Baa2/BBB-/BBB+ BNP/MS 5/13
United Tech. $1.0 bln 30-yr A2/A/A+ BAS/CITI 5/13
Wells Fargo Cap $2.5 bln perpetuals Aa3/AA-/NA JPM/ML/MS/UBS 5/12
------------------------------------------------------------------------------
PREVIOUS SPLIT-RATED BOND SALES
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
PS of New Mexico $350 mln 10-yr Baa3/BB+/NA LEH/ML 5/8
------------------------------------------------------------------------------
PREVIOUS HIGH-YIELD BOND SALES
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
*Atlas Energy $150 mln 10-yr B3/B/NA JPM/WACH 5/6
*DIRECTV Hldgs/LLC$1.35 bln 8-yr Ba3/BB/NA JPM/BAS/CS 5/7
*Newfield Explor $600 mln 10-yr Ba3/BB-/NA JPM/MS 5/5
------------------------------------------------------------------------------
PREVIOUS CONVERTIBLE SECURITIES SALES
COMPANY AMT MAT/DEBT RTGS MGRS PRICED
------------------------------------------------------------------------------
DEALS RECENTLY POSTPONED
COMPANY AMT MAT/DEBT RTGS MGRS DATE POSTPONED
Bunge Ltd Fin $TBA 5-yr Baa2/BBB-/BBB BNP/HSBC/JPM/RBSGC 3/12
Bunge Ltd Fin $TBA 10-yr Baa2/BBB-/BBB BNP/HSBC/JPM/RBSGC 3/12
------------------------------------------------------------------------------
MANAGERS: SYNDICATE DESK NUMBERS:
GENERAL HIGH-YIELD HIGH-GRADE
ABN - ABN Amro Securities Inc 212-409-7563 212-409-7563
BAS - Banc of America Securities 212-583-8352 212-933-3433
BOCM - Banc One Capital Markets 312-732-7885 312-336-2525
BARC - Barclays Capital 212-412-2626 212-412-6730
BEAR - Bear Stearns & Co 212-272-5007 212-272-5371
BNP - BNP Paribas 212-841-3658 212-841-3658
CITI - Citigroup Global Markets 212-723-6001 212-723-6121
CS - Credit Suisse 212-325-3290 212.325-3325
DBS - Deutsche Bank Securities Inc 312-336-2525 312-732-1476
GS - Goldman Sachs & Co 212-902-8204 212-902-5954
JPM - J.P. Morgan Chase & Co 212-270-1100 212-834-4533
KBW - Keefe Bruyette & Woods 212-887-7777
LEH - Lehman Brothers Inc 212-526-9664 212-526-9664
ML - Merrill Lynch & Co 212-449-6762 212-449-4949
MS - Morgan Stanley 212-761-1286 212-761-1957
UBS - UBS Investment Bank 203-719-1556 203-719-1088
WACH - Wachovia Securities 704-383-1928 704-383-7727
((U.S. Financial Desk 646-223-6330))
Keywords: MARKETS CORPORATEBONDS CALENDAR
EURO CORP-Spreads widen in thin market as fears persist
Reuters: [2008-05-23 10:16:00]
By Richard Barley
LONDON, May 23 (Reuters) - European credit spreads widened early on Friday, extending a two-day slide caused by renewed worries over oil prices, the economy and credit ratings, although activity was thin due to a looming UK holiday.
By 0753 GMT, the Markit iTraxx Crossover index <ITCRS5EA=GFI>, made up of 50 mostly "junk"-rated credits, was at 83.5 basis points, according to data from Markit, 4.5 basis points wider versus late Thursday.
The investment-grade Markit iTraxx Europe index <ITRAC5EA=GFI> was at 457 basis points, 12 basis points wider.
The indexes have now broken slightly above the recent ranges of 60-80 basis points for Europe and 400-450 basis points for Crossover, and are respectively 15.5 and 44 basis points wider versus last Friday.
"This week's spread trend was pretty encouraging for bears," analysts at UniCredit said in a note to clients. "Credit markets remain sentiment-driven and we do not expect this to change over the next several trading sessions."
"Tightening potential at current levels is pretty limited, while we t.whink that the Main (Europe index) will easily reach triple-digit terrain in the short term," they warned, saying this could happen in one to three months.
However, early on Friday, there was little to drive the market. "It's quiet ahead of the long weekend," said one trader, with the path of least resistance leading to wider spreads.
UK markets are closed on Monday which, combined with a holiday for some parts of Europe on Thursday, has meant a decline in activity in both primary and secondary markets.
"The primary market window has closed, temporarily perhaps, after a good run this month as the indices moved higher," said Suki Mann, credit strategist at SG CIB.
Looking ahead, the key data for Friday is U.S. home sales data due at 1400 GMT.
"The headline number is expected to show continued weakness in the housing market," credit strategists at Deutsche Bank said in a note to clients. "However we would also pay attention to the average house price numbers as this will give clues as to the dynamics and pace by which the glut of inventory is being cleared."
In the cash bond market, the FTSE Euro Corporate Bond Index <EUCRAVSPG=> showed investment-grade corporate bonds in euros yielding an average 110.5 basis points more than similarly dated government bonds, 1.5 basis points more on the day.
In underlying government bond markets, the yield on the interest rate sensitive two-year Schatz <EU2YT=RR> was 4.183 percent, 2.8 basis points lower on the day. The 10-year Bund <EU10YT=RR> yielded 4.272 percent, 3.5 basis points lower.
The 10-year euro swap rate <EURAB6L10Y=> was 4.666 percent. ((richard.barley@thomsonreuters.com; +44 20 7542 7770; Reuters Messaging rm://richard.barley.reuters.com@reuters.net))
* Reuters clients can view related news by double clicking on:
[EUB] All Eurobond news
[DBT] Debt reports
[EUB-ISU] New debt issues
[IGD] Investment-grade bonds
[HYD] High-yield bonds
[ABS] Asset-backed securities
[CDV] Credit derivatives news
[AAA] Credit ratings news
[TOP/DBT] Top fixed income news
[TOP/CREDIT] Top credit news
Other market reports:
[GVD/EUR] Euro government debt report
[US/] U.S. Treasury market report
[USC/] U.S. corporate bond report
[.EU] European stock market report
[.L] UK stock market report
[.N] Wall Street report
Guides:
For prices or rates, double click on: <EUROBONDS>
For credit ratings, double click on: <RRS0001>
For credit derivatives, double click on <CDSINDEX>
For top corporate bond issuers, double click on <0#TOPISSUER>
Keywords: MARKETS BONDS EUROCORP
PRESS DIGEST - New York Times business news - May 23
Reuters: [2008-05-23 09:24:00]
May 23 (Reuters) - The following were the top stories in The New York Times business pages on Friday. Reuters has not verified these stories and does not vouch for their accuracy.
* A sensor is being tested by the U.S. Federal Aviation Administration to detect "foreign object debris," that can damage airplane engines on takeoff or even lead to plane crashes.
* Rising gas prices and falling truck sales prompted U.S. automaker Ford Motor Co <F.N> to announce production cuts and retreat on its goal to become profitable by 2009.
* Kyphon, a unit of Medtronic Inc <MDT.N>, defrauded Medicare of hundreds of millions of dollars, according to a civil lawsuit that was unsealed Thursday and simultaneously settled with the Justice Department. Two insiders said Kyphon improperly persuaded hospitals to keep people overnight for a simple outpatient procedure to repair small fissures of the spine.
* Avastin, already widely used to treat other types of cancer, is leading a pack of new drugs that look promising as treatments for brain cancer, one of the deadliest and least treatable forms of cancer.
* In what has become a regular show in the hearing rooms on Capitol Hill, oil company executives took a second day of lashings over the rising price of gasoline.
* As the crucial summer travel season starts amid rising gasoline prices and airfares, tourism marketers are changing their pitches. The familiar commercials with cute, funny tales about travelers whose lives are changed by trips to Las Vegas have been supplanted by spots with a fast-talking pitchman who urges the world to "do Vegas right now."
* The eighth-longest strike ever for the United Automobile Workers union ended as workers at American Axle & Manufacturing Holdings Inc <AXL.N> approved a four-year contract that the UAW's president had described as subpar but "the best we can do."
* Japan says it wants to send at least 220,000 tons of rice to the Philippines, and possibly Africa to help the poor. But critics are pointing to a trade issue.
* Serious management failures by superiors allowed a rogue trader at French bank Societe Generale <SOGN.PA> to commit the biggest fraud in financial history, according to an internal report to be released.
* The British Bankers' Association is trying to determine whether some of the 16 banks that it polls each day to set the rate at which banks borrow money from each other provided false or misleading rates.
* Standard & Poor's indicated it was likely to cut the credit ratings of nine big airlines in the latest sign that the outlook for the airline industry is darkening. ((Compiled by Tenzin Pema; Bangalore Equities Newsdesk +91 80 4135 5800; within U.S. +1 646 223 8780))
Keywords: PRESS DIGEST/NYT
EURO CORP-Spreads steady; oil, economy worries persist
Reuters: [2008-05-23 08:35:00]
LONDON, May 23 (Reuters) - European credit spreads were little changed early on Friday, with a thin data and results calendar combining with a looming public holiday in the UK to reduce activity.
By 0625 GMT, the Markit iTraxx Crossover index <ITCRS5EA=GFI>, made up of 50 mostly "junk"-rated credits, was at 446 basis points, according to data from Markit, 1 basis point wider versus late Thursday.
The investment-grade Markit iTraxx Europe index <ITRAC5EA=GFI> was at 79.5 basis points, 0.5 basis points wider.
Credit spreads have widened sharply in the last two days as concern has built over record oil prices and the path of the U.S. economy, and further doubts have emerged over the credibility of ratings on complex products.
"We are left almost exclusively watching the indices for direction ... and we are almost certainly going higher as we digest and mull over the negative newsflow," Suki Mann, a credit strategist at SG CIB, said in a note to clients. "Market liquidity ... is draining away to a trickle." (Reporting by Richard Barley; Editing by David Holmes) ((richard.barley@thomsonreuters.com; +44 20 7542 7770; Reuters Messaging rm://richard.barley.reuters.com@reuters.net))
Keywords: MARKETS BONDS EUROCORP/
Next: PRESS DIGEST - Wall Street Journal - May 23