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Dispersion Is Still Very High

18 November 2014 by lberuti

Today was marked by the underperformance of credit compared with equities. While stocks enjoyed a positive session (Eurostoxx up almost 1.5%), credit indices closed wider across the board, even though their fair values was marginally tighter in Europe. But once again, the most striking feature was the dispersion among the names in the high yield universe. After its horrid widening last week, ABGSM ( Abengoa SA ) snapped back most of its loss after the management clarify their cash position and reassured the market regarding their relationships with their bankers during a conference call yesterday and begun a round of investors’ meeting today. ASTIM ( Astaldi Spa ), BRIPL (Brisa) and BNSIM ( Beni Stabili ) which suffered previously from ABGSM’s woes, also tightened in sympathy. UNILSUB (Unilabs Subholding AB) first opened under pressure (the 5 year risk premium was up 4 points at some stage in the morning) ahead of their results, before eventually posting better than expected numbers and closed 30bps tighter. At the other end of the spectrum, STENA saw its risk premium increased 10bps after its CEO commented on the weaker outlook and recovery post cutting 1000 jobs. OTE ( Hellenic Telecommunications Organisation SA ) kept suffering from dealers bad positioning and also widened 30bps on the back on these technicals.