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And Whoosh It Was Gone

01 September 2017 by lberuti

CSTM ( Constellium NV ) operates as a downstream aluminium producer. Its products serve a broad range of applications. The company sells aircraft parts, industrial coil, window frames and car bodies to aerospace, automotive and packaging customers around the world. It was introduced in the series 27 of iTraxx Crossover so that the number of that index constituents stays at 75, but its inclusion could be short lived. It has been one of the star performers in the Crossover universe since early August, when it was first reported that CSTM was weighing options after drawing takeover interests. Rumours of a takeover resurfaced yesterday, when articles stated that Hindalco Industries Ltd, a conglomerate belonging to Indian billionaire Kumar Mangalam Birla, would be taking a close look at CSTM or Aleris as potential targets via its subsidiary Novelis (currently single B rated). One would think this would be a mutually exclusive event, and it is tough to tell at this stage whether CSTM ticks more boxes from Novelis’ perspective. Investors considered it likely enough to shave another 40bps off CSTM’s 5-year risk premium and sent it to 220bps. It has been halved over the last month.