Credit-default swap spreads on U.S.-based supermarket chains including Safeway, Albertson's and Kroger were pushed out further last week after a West Coast protection buyer snapped up around USD100 million of default swaps on the grocers. The names were already reeling from drastic cuts in earnings because of ongoing labor strikes.
Five-year credit protection on Kroger blew out to 47bps last Wednesday, compared with 42bps the week before while Safeway and Albertson's both widened to around 61bps, out from 53bps in the same period, said a New York-based trader.
Kroger announced that the labor strike had slashed its profits for the quarter by a mammoth 57% last week, explained a trader. Albertson's has also blamed the dispute for cutting its earnings by 50%. The three supermarket giants are embroiled in the dispute with workers in Southern California who have been on strike since October in opposition to planned cuts in health care benefits.
