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United In Diversity

27 March 2019 by jbchevrel

Renault SA (RENAUL) has been the best performing CDS in iTraxx Main. Its 5y CDS is tighter by -6bp vs +0.7bp on the index and +0.1bp on the average of the index constituents. In parallel, Fiat Chrysler Automobiles N.V. (FCAIM) has been 3rd best performer in Xover, with its 5y CDS tighter by -18bp. This is after the FT reported that Renault aims to restart merger talks with Nissan within 12M and then acquire another carmaker, FCAIM being amongst the most likely ones. The recent creation of a new alliance board led by Renault chairman has seemingly improved confidence between the two sides. The potential further acquisition would make the group size able to compete with VW and TOYOTA. Ghosn reportedly tried to merge with FCAIM 3Y ago but the French government opposed it. FCAIM on its side, has lately been quite vocal about their willingness to find a merger partner. Those news took the FCA/RNO spread to 25bp, converging one step, between the BBB/Baa3 French group and the BBB-/BB+/Ba3 Italian one.