Credit default swaps on Hutchison Whampoa traded actively early last week after its subsidiary Hutchison Whampoa International announced Feb. 2 it would issue USD1.5 billion in Yankee bonds to refinance existing debt. Five-year credit default swap pricing on the credit ballooned on the day of the announcement by 15 basis points to 145 bps, before settling in to around 133bps by Wednesday, said traders and brokers in Singapore and Tokyo. Five-year credit default swaps traded several times Feb. 2 and last Monday, at 145bps and 135bps respectively. It then traded at 131bps Thursday.
Credit default swap prices on Hutchison dropped back down so quickly because, despite the initial rush to buy protection, the single-A rated credit is in much better shape than other telecom companies, said one trader in Singapore. Traders and brokers declined to comment on who had executed the deals or on their notional sizes.
