20 January 2021 by jbchevrel
Today was a general risk-on session. In the US, the CDX HY s35 index tightened by -4bp as the S&P clearly broke [by almost 1%] above the 3,800 handle. Among CDX HY s35 constituents, was displayed a decent dispersion with Bombardier CDS tighter -90bp, Murphy Oil -25bp and Netflix -22bp, while the fair value of CDX HY is ‘only’ tighter by -3bp. Bombardier CDS was tighter -90bp, as Britain granted Bombardier’s train unit £1.7B in export funding, which the company will use to invest in the factory in Derby [2k staff] after winning a contract to build trains for new monorail lines in Cairo. The loan guarantee will directly support c100 jobs at the plant, that is £17M funding per job saved. Murphy Oil tightened -25bp on the back of the solid rally that’s been taking place in base commodities so far this year. The 1mbd unilateral cut done by the Saudis helps on the supply side, while markets expect the vaccines to lift demand for oil, from this summer onwards. Finally, Netflix tightened -22bp. This was much more significant in relative terms, as this tightening represents 20% of the spread. The move occurred on the back of the solid Q4 results published last night. “We believe we no longer have a need to raise external financing for our day-to-day operations” they said, as the company reported it passed 200m subscribers. NFLX also said that it would explore stock buyback, which in this context, was not a negative for credit, but allowed the stock to gain +15%.