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There Ought To Be One

13 July 2015 by lberuti

As no one expected Greece to bow to all the demands of the Eurogroup, the market opened on a weak note. But just after the first trades took place, it was announced that a deal had been reached between Greece and its European creditors. Risk premia ripped tighter across the board. Not every single one of them though. While most iTraxx Crossover’s (ITXEX) constituents followed the index which went from 12bps wider to 12bps tighter in the blink of an eye, MTNLN’s (Matalan) 5 year CDS remained stubbornly wider. The company released their Q1 results for 2015/2016, and they confirmed the supply chain issues they have been facing with the transition to their new Northern warehouse. Guidance has been revised down accordingly, and even though arbitragers trying to take advantage of ITXEX trading expensive (ie tighter) compared with it sfair value were selling protection, MTLN’s 5 year risk premium ended 59bps wider at 867bps.