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Weekly Credit Strategy Update
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The US auto makers are in severe distress
Fri, Nov 21 2008, 13:00 GMT
by Danske Research Team
Despite relatively limited newsflow, the credit market has been extremely weak with spreads moving considerably wider. Also a number of CDSs on sovereigns have moved substantially wider, which illustrates the challenging technical situation in the market. The US auto makers are in severe distress and we are currently awaiting news on whether the Federal Government will provide aid to them.
It has been a rough week for credit (and equity) investors even though the newsflow has been relatively limited. The most important theme during the week was whether or not the three big US auto makers should get aid from the US Government. As we write it is still unclear if the companies will get help. Without help, one or more defaults are very likely to take place as liquidity is becoming a scarce resource for the auto makers. Within the next couple of days we will probably have more details and we think more clarity on this topic is likely to be a credit market mover in the short term.
Currently, the investment grade index, iTraxx Europe, trades at 183bp up from 148bp last Friday. The high yield index, iTraxx Crossover, trades at 920bp up from 814bp last week. During the week we passed the all-time wide levels in indices.
Published on Fri, Nov 21 2008, 13:11 GMT
Archive
- CDS indices remain range bound
Published On Fri, Nov 6 2009, 13:28 GMT - High spread volatility on the back of mixed economic news from the US
Published On Fri, Oct 30 2009, 18:24 GMT - The trend continues as spreads go gradually tighter
Published On Fri, Oct 23 2009, 10:49 GMT - Macroeconomic disturbances hurt markets
Published On Fri, Oct 2 2009, 12:32 GMT - Spreads are slightly tighter in an uneventful week
Published On Fri, Sep 25 2009, 09:40 GMT
Danske Bank
| Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com
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This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.Related reports
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