01 September 2015 by admin
The month of September begun with some familiar themes: Asia sent some very negative vibes overnight and commodities resumed their chaotic run. Emerging markets and more specifically Brazil are also weighing on investors’ sentiment. That was obvious from RALFP’s ( Rallye SA ) and COFP’s ( Casino Guichard Perrachon SA ) 5 year CDS price action which closed 85bps wider at 556bps and 13bps wider at 167bps respectively. RALFP definitely suffers from the continued weakness in Casino’s operations which are exposed to Brazil headwind. But the limited portfolio of assets that the company can sell in order to delever is also a concern and people begin to argue that RALFP’s risk premium is now looking tight when compared with names like Iceland or Boparan. It is now trading through the 500 level, and if the trajectory remains the same we will see upfront quotes very soon.