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Atomic Provisions

15 September 2015 by lberuti

For most of the credit market it was a day of 2 halves. Risk premia were wider in the morning and came back to almost unchanged once the US came in. One sector widened and never looked back though: utilities. The move happened on the back of an article in a German magazine highlighting concerns regarding the provisions made by the biggest German utilities towards the decommissioning of nuclear plants. The shortfall could be as high as 30Bln euros to pay for the disposal of nuclear waste. EOANGR ( E.ON SE ), RWE ( RWE AG ) and ENBW ( Enbw Energie Baden Wuerttemberg AG ) bore the brunt of the risk selling. But while their stocks recovered in the afternoon once the German Economy Minister branded the report “irresponsible speculation”, their 5 year CDS kept trading wider- they all closed at the widest levels of the day, RWE at 143bps (+19bps), EOANGR at 95.5bps (+11.5bps) and ENBW at 77.5bps (+11bps) -, as a vast portion of investors own bonds of these usually uneventful names.