26 October 2016 by lberuti
They cannot stop… Every day brings news of new M&A deals going through or in the making. They take place in all geographies and impact companies of all sizes. After mega deals announced in the media and telecommunication industry and in the tobacco sector, shipping provided the market with some excitement today. CMACG (CMA CMG), the French private company which bought Neptune Orient Lines Ltd earlier this year for $2.4Bln – the deal was completed in June and Neptune Orient Lines delisted in September -, announced that they have started the process of selling the Singapore company’s terminal business in a move that could net them roughly $1bln. CMA CMG was introduced in the iTraxx Crossover (ITXEX) index for the first time in March this year and it was one of the new entrants in the series 25. Since then, its 5-year risk premium has had a chaotic run as investors’ nerves have been tested by a few defaults in the industry along the way. The sale which may attract interest from terminal and ship operators as well as infrastructure funds will help CMACG cut its debt pile which currently stands at roughly $2.2Bln. This rare piece of good news was enough for investors to send CMACG 5-year risk premium 4.625 points tighter (that is almost 200bps running) to 21pts upfront + 500bps running (ie insuring $1 of CMACG’s debt against default for 5 years costs 21cts upfront and another 5cts every year).
Meanwhile, the broader credit market tried to trade wider during most of the session as interest rates have resumed their trend higher, but without any real conviction. Eventually a spike in oil prices on the back of some inventory data was used as an excuse to bring credit indices to almost unchanged levels on the day across the board.