Blog

Our Experts Comment the Times Series

See All the Comments
rss

M&S CDS Update

08 January 2021 by jbchevrel

Marks and Spencer Group plc (M&S) is a retailer in the United Kingdom, with over 1,380 stores around the world. About 9/10 of its revenue is generated in the UK. The group sells brand food, clothing, and home products. Today the UK retailer published its Christmas trading statement covering the 13 weeks to 12/26. It was generally stronger than the market had expected. A member of XOver since s31 included, M&S 5y CDS tightened -15bp on the day. Despite COVID and restrictions, trading was robust over the Christmas period. The Food business worked well, including Ocado Retail and Clothing & Home accelerated online. It is basically impossible to book any Ocado delivery since the burst of the 3rd wave [I lost count] which we are experiencing in London and the South East. Net net, Food LFL sales increased +3%, with LFL ex-hospitality up +6%. At the second order, M&S CDS benefits this week from the UK-EU trade deal that was agreed during the holiday period. While UK domestic banks had priced a deal earlier, some UK-focused corporates are outperforming this week, partly thanks to that rationale. Elsewhere, credit was firm with firm labor data in the US and reports that the Pfizer vaccine works against one of the most concerning mutations in the highly transmissible variants of coronavirus discovered UK/South Africa. More precisely, scientists tested the engineered virus against antibodies from 20 trial participants who had been vaccinated. The antibodies were able to neutralize the virus just as effectively as when targeting the previous coronavirus variant. The vaccine has not yet been tested against another mutation on the spike protein in the South African variant, which a group of scientists warned earlier this week could make some vaccines less effective. Testing of the vaccine against the other mutations will continue.