Tobacco Giant CDS May Face Orphaning Woes

A business reorganization at U.S. cigarette maker Altria may see debt retired and credit protection holders with worthless contracts--a phenomenon known as orphaning.

  • 14 Jul 2006
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A business reorganization at U.S. cigarette maker Altria may see debt retired and credit protection holders with worthless contracts--a phenomenon known as orphaning. Traders said players long protection/short Altria bonds are closely following discussions the company may split into three entities.

Last Friday, it looked likely Altria would break away from subsidiary Kraft Foods as well as demerge its tobacco business into Philip Morris USA and Philip Morris International. While Kraft CDS already trade as stand-alone debt, it is unclear how Altria debt will be divided or restructured. "This would likely be a succession issue," said one trading official.

A surge in corporate take-over activity has highlighted CDS orphaning problems in the last few months (DW, 5/5). The International Swaps and Derivatives Association has been hosting dealer discussions on the issue with a view to drafting a supplement to the 2003 credit derivative definitions which will amend so-called successor language.

  • 14 Jul 2006

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 356,356.29 1337 9.08%
2 JPMorgan 317,952.80 1443 8.10%
3 Bank of America Merrill Lynch 316,523.82 1098 8.06%
4 Goldman Sachs 235,165.28 784 5.99%
5 Barclays 229,116.44 888 5.84%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 34,411.72 162 6.58%
2 Deutsche Bank 34,293.84 117 6.56%
3 Bank of America Merrill Lynch 31,113.25 94 5.95%
4 BNP Paribas 27,578.61 168 5.27%
5 SG Corporate & Investment Banking 23,982.83 136 4.59%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 19,536.02 78 8.84%
2 Morgan Stanley 16,323.54 83 7.38%
3 Citi 15,946.50 94 7.21%
4 UBS 15,404.75 59 6.97%
5 Goldman Sachs 13,695.77 74 6.19%