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Caught Off Guard

28 July 2015 by lberuti

What goes up has to eventually come down … in most cases anyway. That is definitely what happened to commodity related names today. Their credit risk premia, which have been put under severe pressure by the market over the last couple of weeks, consolidated and were marked tighter. It is only a one day move though, and no one is calling an end to their woes as their trajectory still points resolutely upwards. The same cannot be said for PORTEL (Portugal Telecom International Finance B.V.) and CWCLN (Cable & Wireless Limited) which saw their 5 year CDS keep moving wider by 30bps (to 606bps) and 36bps (to 207bps) respectively. There was no obvious explanation for the move, and people were blaming poor liquidity and bad dealers’ positioning in a seasonally thin market.