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Lufthansa Under The Cosh

31 March 2015 by lberuti

Since the roll, most of the corporate names have been trading sideways. Even the recent rise in oil has not had its usual side effect on airline companies. The 5 year risk premium of BAB (British Airways Plc) is actually tighter today at 116bps than it was on March 20th (116bps) and that of AFFP (Société Air France) is unchanged at 71bps. There is one name in the sector which has been on the move in Europe though: LUFTHA (Deutsche Lufthansa) has seen its 5 year CDS charge wider after the recent tragedy during which a plane of Germanwings, its low-cost subsidiary, crashed in the French Alps. After an initially muted reaction, the 5 year CDS has widened 24bps to 126bps. The $300mln rumoured by the press to have been tagged by LUFTHA for potential claims have eventually taken their toll on the company. This trend should be backed tomorrow when DTTC publish their weekly volume statistics, and one should expect a fair amount of protection to have changed hands.