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The Signal Reached The Credit Market

06 November 2017 by lberuti

“We will realise about one third of the targeted 400mln euros of annual savings in full-year 2017 but this is at the low end of what could have been possible” said Mr Combes, the CEO of ALTICE ( Altice NV ), when he commented the results of the company last week. Cost cutting in France is proving difficult – since ALTICE bought SFR in 2014, the latter has consistently lost customers - and full year forecast for earning growth had to be guided down, despite a better than expected performance of the US business. While the stock got hammered – it was marked down roughly 20% -, ALTICE’s 5-year risk premium barely reacted last Friday. Credit investors waited until this morning to reach for protection. The news of a deal reached with Sprint Corp that will allow Altice to sell wireless service in the US using Sprint’s network was not enough to alleviate their concerns and they eventually marked Altice’s 5-year CDS 33bps wider at 299bps, cancelling out all the performance of the past 2 weeks. In a market that has performed very strongly since the September roll, Altice is one of the very few names which have seen their risk premium widen over the period.