10 November 2014 by lberuti
The session turned out to be fairly strong across the board, and there were only a handful of names which closed wider on the day. The tone was a bit more hesitant in the morning though, as people feared that the bank holiday in the US tomorrow would weight on liquidity. In the early hours of trading, RENAUL ( Renault SA ) was one of the standout names. It started the day strongly on the back of an upgrade by Fitch. The rating agency revised RENAUL’s rating to BBB- outlook positive, bringing it back in the investment grade category. The 5 year CDS quickly tightened by 15bps (it closed at 112.5bps) as buyers of cash started to emerge. Indeed, if this upgrade took place earlier that investors had anticipated, they now expect S&P and Moodys to follow suit. If that happens, investment grade funds will start to buy cash, which should lead to further outperformance. Rating actions still matter, especially for names that sit on the border of investment grade and high yield.