DaimlerChrysler Prices Blow Out
Richard Gillingham, head of credit derivatives at Bank Gesellschaft Berlin, said on Tuesday the price for protection fell off its 160bps peak as investors started selling protection on the name because prices looked comparatively rich—although auto names had widened, most were not as wide as DaimlerChrysler. By Thursday, as DW was going to press, five-year default swaps on the name were trading at 145bps. The typical notional sizes were between USD10-20 million.
Moody's Investors Service rates DaimlerChrysler A2 and Standard & Poor's rates it A. Both ratings agencies have the credit on negative outlook.
Maria Bissinger, analyst for DaimlerChrysler at Standard & Poor's in Frankfurt, said Chrysler has suffered sales and profitability problems since the spring, which led to a downgrade in December. Dieter Zetsche, who replaced James Holdon as president and ceo in November, has said restructuring plans would be set out in the first quarter. Bissinger said that if DaimlerChrysler has not turned things around by the middle of 2001 then S&P will downgrade the company again.