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No They Can't

02 March 2017 by lberuti

When one looks at the market over the last few weeks, the tightening trend seems unstoppable, even more so during the last few sessions. But it does not have to be that way, and the widening of the names belonging to the Liberty Media sphere came as a timely reminder. Yesterday, VOD’s ( Vodafone Group plc ) CEO opened the door to expanding the company’s mobile to cable TV alliance with Liberty Global once the companies will have proved that their Dutch venture – sealed at the end of 2016 - is a success. The talk of more ventures, echoed by the CEO of Liberty Global in a separate conversation with reporters, dampened speculation that the two companies were near a closer deal. The risk premia of UPC, IESYRP (Unitymedia), and VMED (Virgin Media) all reacted negatively and were first pushed 5 to 15bps wider at 220bps, 155bps, and 215bps respectively. That proved too tempting to resist for investors who desperately want to exit any shorts though, and these three names eventually closed almost unchanged on the day. All that was left at the end of the session was an underperformance compared to other non-investment grade credits, which were 8bps tighter on average. Risk premia cannot go wider at the moment.