Five-year credit-default protection on Ahold, a Dutch international retailer, tightened by around 100 basis points last Thursday to 270-290bps. The narrowing came after the corporate produced some positive headline 2000-2002 numbers for Stop & Shop, its U.S. supermarket chain, and Albert Heijn, its Dutch supermarket. Ahold is expected to produce accounts for 2002 at the end of September.
Traders said they had seen good volumes with trade of around EUR2-3 million (USD 2.2-3.3 million) and a total of approximately EUR15 million during the week. Trading in credit-default swaps had been accompanied by heavy bond trading.
Ahold announced in February that it had overstated the profitability of its U.S. food service business by around EUR900 million and it has yet to produce updated results. These have been delayed three times. Jonathan Pitkänen, retail credit analyst at Fitch Ratings said, "I think that the release of the Stop & Shop and Albert Heijn data has helped to calm the market." Fitch rates Ahold BB minus and has the corporate on negative watch.
In addition to producing its 2002 accounts at the end of September, Ahold is also due to pay-off a convertible bond of around EUR700 million. Pitkänen said that Fitch's negative watch was closely related to the uncertainty of the accounts and whether it can afford to pay-off the convertible bond.
Moody's Investors Service rates the retailer B1 and Standard & Poor's puts it at BB minus. Both have the stock on negative outlook.
Five-Year Credit Protection On Ahold
