Five-year credit-default swap spreads on hotel group Accor widened 30 basis points last week even though the group's annual revenue reports were in line with market expectations. The price of protection jumped to 135 on Tuesday from 104 the previous Friday.
The jump in spreads followed a presentation of Accor's 2003 consolidated sales figures, which showed revenues down 4.3%. But, traders said this was in line with market expectations and were baffled as to why the market reacted so aggressively.
A credit analyst at a German bank said there was a lot of speculative trading and volatility on the cash side and this pushed up the price of protection. He added there were rumors the ratings agencies might downgrade Accor. Spreads tightened back in to trade at 110bps on Wednesday and traders were expecting spreads to continue tightening.
Standard & Poor's rates Accor triple-B and placed it on CreditWatch negative in June. In September, the agency warned that the company could be downgraded one notch to triple-B minus if the 2003 results were poor. Claude Chaubet, a spokeswoman at Standard & Poor's in London, said it is unlikely to change the rating until the annual results are published in March. Moody's Investors Service gives Accor a short-term rating of stable non-prime, which is the lowest possible rating, and there is no long-term rating for the corporate.
