Weak Earnings Drive Auto Spreads Wider

  • 27 Oct 2003
Email a colleague
Request a PDF

Five-year credit default protection on auto makers spun out last week with one of the biggest moves coming from DaimlerChrysler after the corporate posted weaker than expected earnings on Tuesday. The German giant traded 30 basis points wider on the week, blowing out to 130bps last Wednesday, said a New York-based trader. Widening on the name was further provoked by Standard & Poor's slashing its rating on the firm to BBB, from BBB plus, and assigning it a negative outlook, he said. Ford Motor Credit, meanwhile, continued its volatile ride with protection on the name blowing out to 270bps, from 210bps the previous week. This is a huge move for a credit as large as Ford, the trader added.

Much of the trading volume came from speculative players, including hedge funds, which were both buying and selling protection, said the trader. It was unclear why DaimlerChrysler was trading so much tighter than other autos, although this was largely put down to technical factors holding the name in, he said. A compression trend, which either sees DaimlerChrysler widen or names including Ford move in, is likely in the coming weeks, he predicted.

S&P placed Ford and its subsidiaries on CreditWatch last Tuesday. Scott Sprinzen, analyst in New York, said the negative outlook reflects concerns over Ford's ability to achieve overall satisfactory financial performance, particularly noting the corporate's lack of success in turning around its European operations. In spite of these concerns the ratings agency does not expect to downgrade Ford.

Five-Year Protection On DaimlerChrysler

  • 27 Oct 2003

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 346,069.71 1350 8.09%
2 JPMorgan 342,066.65 1471 7.99%
3 Bank of America Merrill Lynch 307,117.30 1065 7.18%
4 Barclays 258,537.34 976 6.04%
5 Goldman Sachs 227,890.51 774 5.33%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 48,411.81 205 6.53%
2 JPMorgan 46,311.15 105 6.25%
3 UniCredit 40,595.43 182 5.48%
4 SG Corporate & Investment Banking 38,348.83 146 5.17%
5 Credit Agricole CIB 38,097.35 189 5.14%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 14,514.87 63 9.19%
2 Goldman Sachs 13,469.15 66 8.53%
3 Citi 9,971.36 58 6.32%
4 Morgan Stanley 8,572.10 54 5.43%
5 UBS 8,414.70 37 5.33%