Security Fears Cause Aircraft Spreads To Widen

The price of protection on companies linked with air travel jumped last week after a British Airways flight to Washington was grounded because of fears it was being targeted by terrorists.

  • 11 Jan 2004
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The price of protection on companies linked with air travel jumped last week after a British Airways flight to Washington was grounded because of fears it was being targeted by terrorists. Credit-default swap spreads on British Airways widened by around 15 basis points to 275bps. By Wednesday, however, spreads had tightened to 260bps again, driven by the release of data showing December passenger numbers were better than expected. Spreads on Lufthansa and SAS also widened.

Suppliers to the carriers were also hit. For example, five-year spreads on Rolls-Royce, an engine manufacturer, jumped 10 basis points last week to 56bps on Wednesday. "If anything, the name is more liquid now there's been more trading," said one London-based credit-default swap trader.

Tassos Philippakos, an analyst at Moody's Investors Service, said, "Moody's believes that the downcycle in the civil aerospace market will last through the year." In addition, the weak dollar has hurt Rolls-Royce because most of its sales are dollar denominated but it has European and U.K.-based operations and costs.

Myriam Durond, a Moody's analyst covering British Airways, said the outlook for the carrier is negative because of uncertainties over passenger volumes and a weak near-term operating performance. A recent Moody's reported said a terrorist attack could push the rating down.

Five-Year Protection On Rhodia

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All International Bonds

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 315,127.01 1180 8.93%
2 JPMorgan 287,462.46 1311 8.15%
3 Bank of America Merrill Lynch 283,091.16 983 8.02%
4 Goldman Sachs 215,276.84 707 6.10%
5 Barclays 206,805.33 799 5.86%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
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1 Deutsche Bank 31,971.88 102 6.82%
2 HSBC 31,420.91 141 6.70%
3 Bank of America Merrill Lynch 28,468.55 82 6.07%
4 BNP Paribas 24,740.49 136 5.28%
5 SG Corporate & Investment Banking 22,195.55 122 4.73%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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  • Today
1 JPMorgan 15,956.24 68 8.20%
2 Morgan Stanley 15,028.69 75 7.73%
3 UBS 14,195.29 55 7.30%
4 Citi 13,827.82 85 7.11%
5 Goldman Sachs 11,994.74 65 6.17%