Credit-default protection on Vivendi
Universal rocketed over 400 basis points wider on Tuesday
morning in London as Moody's Investors Service announced a
downgrade of the media company's long-term debt to Ba1 from Baa3.
Swap spreads for five-year protection on Vivendi closed Tuesday at
approximately 1,100 basis points, compared to 640bps in the
morning, said traders.
Default swap spreads on other telecom names
widened as well, including five-year protection on France
Telecom, which blew out to 600-650bps from 560-610bps, before
settling at 586bps. Deutsche Telekom also saw a 30bps jump
Traders said the volume of tickets traded on
Vivendi were approximately double typical volumes, with five to 10
trades going through a day. However, they said the average size of
trades has dropped off over the past month, from about EUR5-10
million (notional) to EUR2 million.