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Convalescent at Best

16 March 2018 by pdonnat

Altice published its Q4 earnings yesterday evening. Financial and operational performances were better than expected. The Altice synthetic credit complex tightened scientifically today: SFR Group S.A. was tighter by 40bps while Altice Finco S.A.was tighter by 25bps. Both reference entities are members the European Crossover Index. Altice's CDS performed better than Altice's equity, deleveraging stories are good music for credit investors. The company is still far from having access again to cheap funding. On the volume side, it is quite difficult to analyse the trading activity on Altice’s CDSs. They are not cleared by Ice (visit OTCStreaming). They are cleared only by LCH with around 100MEuros per reference entity. This is a small amount compared to the total debt of the company, close to 50BEuros. The volumes reported by DTCC - with a delay - are indicating that the name is quite active with around 40M daily traded volumes. The name keeps trading over-the-counter on a bilateral basis. It deserves to be cleared by all clearers due the trading activity. The credit market focus is volatile and investors are agile. The regulated services are always a step behind - agility and regulation are barely compatible. Meanwhile, the credit index market was better oriented in a subdued session. A lot of market participants were crunching numbers to estimate where the index rolls will trade next week.