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Why Didn’t You Say It?

23 March 2016 by lberuti

Since the beginning of the year, the ups and down of PFDLN’s ( Premier Foods Plc ) risk premium have been tightly linked to the moves of iTraxx Crossover (ITXEX). But today the correlation was broken. While ITXEX finished the session 9bps wider at 310bps, PFDLN’s 5 year CDS closed 255bps tighter at 165bps without a buyer of protection in sight. The company announced this morning – and it came as a shock to the market - that they had spurned potential cash offers of 52 pence a share in February and 60 pence a share last week. The offers were made by McCormick & Co, the single A- rated American spice producer, but PFDLN said they would rather join forces with Nissin Foods Holdings Co under some kind of joint venture format that was not described as a merger. The market seems to indicate that the money could be too good to resist to shareholders: the stock closed 70% higher 53.75p.