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Desperate Times Call For Desperate Measures

05 February 2016 by lberuti

MTNA ( ArcelorMittal SA ) caught the market by surprise this morning. They released their results one week ahead of schedule, but above all they announced a $3bln capital increase alongside the sale of a $1bln stake in Spanish auto-parts maker Gestamp. The company aim to reduce its debt pile by $4bln to below $12bln from the current $15.7bln. That definitely added to the momentum gathered yesterday, and, if the prospect of a share placement weighted on the stock (it was down 12% at some stage before closing down 5.5%), the 5 year CDS received kudos from investors and tightened by 141bps to 836bps. MTNA’s 5 year risk premium is in excess of 250bps tighter over the last 48h. It is not that bad a performance considering iTraxx Crossover is 25bps wider at 425bps during the same 2-day period.