Tobacco Giant CDS May Face Orphaning Woes

A business reorganization at U.S. cigarette maker Altria may see debt retired and credit protection holders with worthless contracts--a phenomenon known as orphaning.

  • 14 Jul 2006
Email a colleague
Request a PDF

A business reorganization at U.S. cigarette maker Altria may see debt retired and credit protection holders with worthless contracts--a phenomenon known as orphaning. Traders said players long protection/short Altria bonds are closely following discussions the company may split into three entities.

Last Friday, it looked likely Altria would break away from subsidiary Kraft Foods as well as demerge its tobacco business into Philip Morris USA and Philip Morris International. While Kraft CDS already trade as stand-alone debt, it is unclear how Altria debt will be divided or restructured. "This would likely be a succession issue," said one trading official.

A surge in corporate take-over activity has highlighted CDS orphaning problems in the last few months (DW, 5/5). The International Swaps and Derivatives Association has been hosting dealer discussions on the issue with a view to drafting a supplement to the 2003 credit derivative definitions which will amend so-called successor language.

  • 14 Jul 2006

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 29,333.03 101 7.94%
2 JPMorgan 27,208.83 91 7.37%
3 Barclays 23,714.00 55 6.42%
4 Bank of America Merrill Lynch 20,332.10 65 5.50%
5 Goldman Sachs 20,005.21 49 5.42%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 48,528.41 214 6.32%
2 Deutsche Bank 44,075.51 161 5.74%
3 BNP Paribas 41,452.79 240 5.40%
4 JPMorgan 37,278.65 134 4.85%
5 SG Corporate & Investment Banking 36,258.27 187 4.72%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Goldman Sachs 1,607.28 5 23.24%
2 Credit Suisse 1,301.65 4 18.82%
3 UBS 970.80 3 14.04%
4 BNP Paribas 522.35 4 7.55%
5 SG Corporate & Investment Banking 444.17 3 6.42%