Invensys Spreads Double On Profit Warning

  • 30 Jul 2001
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Credit default-swap spreads for five-year credit protection on Invensys more than doubled last week after the company issued a profit warning and its chief executive resigned. Protection prices on the U.K. manufacturer blow out to 350 basis points Wednesday from 150bps the Friday before. Traders said Invensys is a liquid name so there continued to be a two-way market but offers to write protection started drying up as banks' credit lines were slashed by their credit departments, according to one trader. The typical deal size was EUR10 million (USD8.8 million).

Leigh Bailey, analyst at Standard & Poor's in London, said it placed Invensys' single A minus credit rating on negative watch Tuesday as a result of the profit warning and the retirement of Allen Yurko, chief executive. Yurko's retirement is effective from Jan. 31 and Rick Haythornthwaite will become chief executive from Oct. 1. Bailey said the company had to issue a profit warning because of a slump in demand in the U.S. across its core products in the power, telecommunications and appliances industry. Moody's Investors Service has not changed its Baa1 rating.

Bailey said a decision on whether to downgrade the company will be made when it meets the management in two weeks. This decision will depend on the company's ability to back up its financial targets. The company's share price plummeted as a result of the news to GBP0.7575 (USD1.08) Thursday from GBP1.0225 Monday.

  • 30 Jul 2001

All International Bonds

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3 Bank of America Merrill Lynch 221,389.46 762 7.78%
4 Goldman Sachs 171,499.26 554 6.03%
5 Barclays 169,046.60 646 5.94%

Bookrunners of All Syndicated Loans EMEA

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2 Deutsche Bank 25,125.19 81 6.94%
3 Bank of America Merrill Lynch 22,023.57 59 6.08%
4 BNP Paribas 19,315.94 110 5.34%
5 Credit Agricole CIB 18,706.93 106 5.17%

Bookrunners of all EMEA ECM Issuance

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1 JPMorgan 12,578.87 55 8.17%
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3 UBS 10,682.06 44 6.93%
4 Goldman Sachs 10,419.53 53 6.76%
5 Morgan Stanley 10,194.88 57 6.62%