13 July 2017 by lberuti
The global credit market cannot widen two weeks in a row and it seems that it needed a couple of strong sessions after a hesitant start to the week. It is a slightly different story as far as European car manufacturers are concerned. They have seen their risk premia steadily increase since the June roll, and investors’ worries with regards to DAIGR ( Daimler AG ) were compounded after press reports said Stuttgart prosecutors were probing the use of so-called defeat devices used to beat emission tests in Europe and in the US… again. It could concern more than a million vehicles sold between 2008 and 2016. Since it was revealed in September 2015 that VW ( Volkswagen AG ) installed software to bypass pollution rules, many car manufacturers have been embroiled in that technology scandal. So far, only FCAIM ( Fiat Chrysler Automobiles ) and VW have suffered regulatory and legal action. And it only happened in the US. With politicians around Europe asking for government action against those who are found to have misled regulators and consumers, investors have left guessing who might be next. While iTraxx Main was 1bp tighter at 54bps – yes, it is back to its tightest levels -, DAIGR’s 5-year risk premium was 1.5bps wider at 49bps.