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Jumbo Issue To Test High-Yield CDS Appetite

18 Nov 2005

Credit-default swap traders are eager to gauge investor reaction to a large European high-yield bond which will hit the market this week.

Credit-default swap traders are eager to gauge investor reaction to a large European high-yield bond which will hit the market this week. They say the volume of protection written on the EUR1.25 billion (USD1.45 billion) note issued by Italian telecom company Wind Telecomunicazioni will indicate the risk appetite of synthetic investors for high-yield CDS. "It will show if investors are really interested in this market and new names, or just defending their existing positions," said one trader at a U.S. house in London. He added, "People will use it as a benchmark to price and trade crossover and high yield names."

The bond is a 10-year euro and U.S. dollar-denominated, two-tranche note and is rated B minus by Standard & Poor's and B3 by Moody's Investors Service.

18 Nov 2005