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Did Alcatel Receive A Call?

18 December 2014 by lberuti

If you look at a heatmap (CDS Treemap available from the grapplestore) and set the cursor on a 1D horizon (in the top left end corner), you will get a sea of green. By the way, you will also see that people were very busy trading sovereign (last week anyway as the numbers currently provided by DTCC regard last week’s volume), and more precisely emerging markets with Russia, Turkey and Brazil occupying the largest squares. But even in this beta driven environment, some names stand out. For instance, ALUFP’s ( Alcatel Lucent SA ) 5 year risk premium closed 50bps tighter at 287bps (remember that all the risk premia in DataGrapple are based on a contract with a 100bps coupon). Indeed, the rumour has it that ALUFP and NOKIA ( Nokia Oyj ) have started talking again about a possible merger or some form of cooperation. It is a story that has been in the market for a while, as talks allegedly already took place and broke off a year ago. If you consider that ALUFP’s CDS was trading at 500bps a couple of months ago, that would be a nice Christmas gift for its creditors.