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Vimpelcom/Hutchison: A Deal Is Done… Not

28 October 2014 by lberuti

As a whole, the credit market has been relatively well behaved since the beginning of the week. There was some intraday volatility, but nothing compared to what we have seen last week. A few names have been all over the place though, and the most striking example is WINDIM. Yesterday, its 5 year risk premium was 25bps tighter @ 425bps as press articles surfaced suggesting that Vimpelcom was weighting merging their Italian assets with Hutchison on the back of comments made by the CFO last week. Investors do not appear to tire of this story which has been going on for more than a year, and they sold protection aggressively. Subsequently Vimpelcom issued a statement saying that they were discussing with Hutchison “the potential value which would accrue to shareholders through a 50/50 joint venture in Italy” and that “no conclusion to these discussions was reached”. Basically, there was in fact nothing new. That did not go down very well with the market which today decided to interpret this as a failure acknowledgement. The 5 year risk premium went all the way back and more, widening 40bps to 466bps.