22 August 2017 by pdonnat
Some Sterling credit investors took a hit today with Provident Financial Plc October 2019 bond trading lower 30% while the equity was down 70%. The company is a specialist in sub-prime credit. The CEO resignation, the dividend suspension, the operating loss on home credit business and a FCA probe were enough to trigger “a sell first, think later”. The very specific nature of this company worth 5B GBP 2 years ago, has not triggered an early warning on the state of the UK economy. The credit index market open stronger. However, the credit market under-performed the equity market. In Europe, some hedging activity was reported on Italy. Italy CDS is closing 6 bps wider at 143. Italian bank CDS have been better bid consequently. Silvio Berlusconi may partner up with other parties to push up for a new currency. Losing the Euro is a great risk for people with low income and pensioners. This idea has sealed the defeat of the far-right party in France. Nevertheless, Italy is facing many challenges. The market has just been reminded that each year there is a crucial election somewhere in Europe.