The news sparked a flurry of protection buying, reported traders. "People have reacted a bit fast on the news," said one trader, who expects the CDS spread to tighten again. On Friday, as DW went to press, it had pulled in one basis point to 35bps. Several traders noted although China is an important market for Anglo American, it is still more focused on the U.S. and Europe.
Steel CDS spreads were also pushed wider by news of the rate rise, coupled with market rumors of mergers, particularly in association with Arcelor. "People are not very confident in the name," said one trader at a German bank. "They are not really hedging it, they are taking short risk positions," he added. Arcelor Finance CDS spreads widened around three basis points to 51bps during the day on Thursday before returning to 48bps at the end of the day, in line with its price earlier in the week.
Moody's Investors Service rates Anglo American A3 and Standard & Poor's assigns the name a single A minus rating.
