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PORTEL’s Bumpy Ride

03 July 2014 by HCM

PORTEL (Portugal Telecom SGPS SA) is the only name to finish the day wider in the high yield European space. As a whole, the market was buoyed by more dovish comments from central bankers (after Mrs Yellen yesterday, it was Mr Draghi’s turn today). But the Portuguese telco company saw its 5 year CDS premium closed 3bps wider, at 244bps. It was actually much worse at some stage. It was trading at 255bps, in reaction to a statement by Oi, the Brazilian telephone company, saying they were not aware that their merger partner had purchased debt issued by Rioforte. Investors fear that it might jeopardise the deal between the 2 telco groups, or that it will at the very least make the whole process more complicated.