Five-year credit-default swap spreads on Sprint moved in Wednesday as word circulated that the telecommunications giant plans to make tender offers for some of its debt. Credit protection on the name tightened to 140 basis points last Wednesday afternoon, 10bps tighter on the day and 40bps tighter on the week with Sprint swaps having exchanged hands at 100bps the week before, according to a trader in New York.
With the credit derivatives market generally experiencing strong flows no type of investor dominated, noted the trader. Convertible arbitrage traders, hedge funds, real money accounts and insurers were all making plays on the name, he said, predicting that Sprint could continue to tighten.
Eric Geil, analyst at Standard & Poor's in New York, which rates Sprint at BBB minus with a stable outlook, said that the slow growth in the telecommunications space, particularly for wireless businesses, remains the largest challenge for Sprint. The corporate's wireless network is where Sprint is supposed to be generating its largest growth, however competition in the field may steepen toward the end of the year, he said. Particularly the possibility for phone users to switch telecom providers and keep their number may increase subscriber churn and in turn may impact upon the stability of Sprint's customer base, he noted. Overall S&P would like to see more sustainable growth in the wireless business in order to boost corporate's rating, he concluded.
Five-Year Mid-Market Protection On Sprint
