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Fitch Solutions: Tighter CDS Shows Increased Confidence for Consumer Services
Mar 08, 2010 (Close-Up Media via COMTEX) --
Tightening credit default swap (CDS) spreads are pointing to healthier earnings for a handful of consumer service companies this week, according to Fitch Solutions in its latest update on Global CDS Spreads/Liquidity Scores for companies scheduled to come out with earnings announcements this week.
AutoZone Inc.'s performance is shedding some positive light within the North American consumer services industry, with CDS spreads tightening 22 percent, compared with 1 percent sector-wide. CDS liquidity for AutoZone, however, has moved up ten regional percentile rankings over the same time period, indicating increased uncertainty over the company's credit outlook.
"AutoZone has proven itself to be countercyclical as demand for auto parts to upkeep older vehicles increases in bad economic times," said Author and Managing Director Jonathan Di Giambattista. "Similar to other retailers, Autozone's current CDS liquidity is likely a result of diverging views on the future of the economy by credit market investors."
Staples Inc. saw the cost of credit protection on its debt diminish by 28 percent over the last quarter, thereby outperforming its peers. Meanwhile, decreasing CDS liquidity for Staples further signals renewed market confidence in the company's ability to recover from the economic downturn.
Markets continue to display confidence in Costco Wholesale Corp.'s credit condition, with CDS spreads trading in the 'AAA' space, three notches above its Fitch long-term rating, and liquidity dropping to the 44th regional percentile.
North America:
AutoZone, Inc. (CONSUMER SERVICES/General Retailers)
Credit spreads have tightened over the last three months, with the five-year point tightening from 77 bps to 60 bps, a decrease of -22 percent. The liquidity score on AutoZone, Inc. decreased from 8.47 to 7.29 over the three-month period, causing an increase in liquidity from trading in the 26th percentile to the 16th percentile.
Boyd Gaming Corp. (CONSUMER SERVICES/Travel & Leisure)
Credit spreads have widened over the last three months, with the five-year point widening from 1038 bps to 1267 bps, an increase of 22 percent. The liquidity score on Boyd Gaming Corp. decreased from 9.39 to 8.15 over the three-month period, causing an increase in liquidity from trading in the 54th percentile to the 40th percentile.
Costco Wholesale Corp. (CONSUMER SERVICES/General Retailers)
Credit spreads have tightened over the last three months, with the five-year point tightening from 41 bps to 41 bps, a decrease of -1 percent. The liquidity score on Costco Wholesale Corp. decreased from 8.86 to 8.29 over the three-month period, causing a decrease in liquidity from trading in the 41st percentile to the 44th percentile.
Dish Network Corp. (CONSUMER SERVICES/Media)
Credit spreads have tightened over the last three months, with the five-year point tightening from 303 bps to 285 bps, a decrease of -6 percent. The liquidity score on Dish Network Corp. decreased from 9.49 to 9.42 over the three-month period, causing a decrease in liquidity from trading in the 56th percentile to the 64th percentile.
El Paso Corp. (OIL & GAS/Oil Equipment, Services & Distribution)
Credit spreads have tightened over the last three months, with the five-year point tightening from 535 bps to 416 bps, a decrease of -22 percent. The liquidity score on El Paso Corp. decreased from 8.16 to 7.14 over the three-month period, causing an increase in liquidity from trading in the 17th percentile to the 11th percentile.
Joy Global Inc. (INDUSTRIALS/Industrial Engineering)
Credit spreads have tightened over the last three months, with the five-year point tightening from 361 bps to 304 bps, a decrease of -16 percent. The liquidity score on Joy Global Inc. decreased from 9.88 to 9.87 over the three-month period, causing a decrease in liquidity from trading in the 64th percentile to the 71st percentile.
MBIA, Inc. (FINANCIALS/Nonlife Insurance)
Credit spreads have tightened over the last three months, with the five-year point tightening from 2265 bps to 2109 bps, a decrease of -7 percent. The liquidity score on MBIA, Inc. decreased from 7.4 to 6.58 over the three-month period, causing a decrease in liquidity from trading in the 2nd percentile to the 3rd percentile.
PHH Corp (INDUSTRIALS/Industrial Transportation)
Credit spreads have widened over the last three months, with the five-year point widening from 531 bps to 581 bps, an increase of 9 percent. The liquidity score on PHH Corp decreased from 9.72 to 9.1 over the three-month period, causing an increase in liquidity from trading in the 61st percentile to the 58th percentile.
Royal Bank of Canada (FINANCIALS/Banks)
Credit spreads have widened over the last three months, with the five-year point widening from 93 bps to 93 bps, an increase of 0 percent. The liquidity score on Royal Bank of Canada increased from 10.81 to 13.78 over the three-month period, causing a decrease in liquidity from trading in the 77th percentile to the 95th percentile.
Staples, Inc. (CONSUMER SERVICES/General Retailers)
Credit spreads have tightened over the last three months, with the five-year point tightening from 105 bps to 75 bps, a decrease of -28 percent. The liquidity score on Staples, Inc. decreased from 8.35 to 7.73 over the three-month period, causing a decrease in liquidity from trading in the 23rd percentile to the 27th percentile.
Toronto Dominion Bank (FINANCIALS/Banks)
Credit spreads have widened over the last three months, with the five-year point widening from 84 bps to 84 bps, an increase of 0 percent. The liquidity score on Toronto Dominion Bank decreased from 12.72 to 12.3 over the three-month period, causing a decrease in liquidity from trading in the 88th percentile to the 90th percentile.
Europe:
Aviva Plc (FINANCIALS/Life Insurance)
Credit spreads have widened over the last three months, with the five-year point widening from 88 bps to 93 bps, an increase of 6 percent. The liquidity score on Aviva Plc decreased from 8.51 to 7.58 over the three-month period, causing an increase in liquidity from trading in the 30th percentile to the 26th percentile.
HSBC Holding plc (FINANCIALS/Banks)
Credit spreads have widened over the last three months, with the five-year point widening from 77 bps to 91 bps, an increase of 18 percent. The liquidity score on HSBC Holding plc decreased from 10.45 to 9.5 over the three-month period, causing an increase in liquidity from trading in the 76th percentile to the 70th percentile.
ITV PLC (CONSUMER SERVICES/Media)
Credit spreads have tightened over the last three months, with the five-year point tightening from 358 bps to 277 bps, a decrease of -23 percent. The liquidity score on ITV PLC decreased from 8 to 7.03 over the three-month period, causing an increase in liquidity from trading in the 15th percentile to the 10th percentile.
Northern Rock Asset Management (FINANCIALS/Banks)
Credit spreads have tightened over the last three months, with the five-year point tightening from 499 bps to 212 bps, a decrease of -57 percent. The liquidity score on Northern Rock Asset Management increased from 9.17 to 9.45 over the three-month period, causing a decrease in liquidity from trading in the 50th percentile to the 69th percentile.
Pearson plc (CONSUMER SERVICES/Media)
Credit spreads have widened over the last three months, with the five-year point widening from 53 bps to 62 bps, an increase of 16 percent. The liquidity score on Pearson plc decreased from 8.76 to 7.82 over the three-month period, causing an increase in liquidity from trading in the 37th percentile to the 36th percentile.
Standard Chartered plc (FINANCIALS/Banks)
Credit spreads have widened over the last three months, with the five-year point widening from 79 bps to 90 bps, an increase of 14 percent. The liquidity score on Standard Chartered plc decreased from 9.39 to 9.04 over the three-month period, causing a decrease in liquidity from trading in the 55th percentile to the 62nd percentile.
Tomkins PLC (INDUSTRIALS/General Industrials)
Credit spreads have tightened over the last three months, with the five-year point tightening from 135 bps to 118 bps, a decrease of -13 percent. The liquidity score on Tomkins PLC decreased from 8.18 to 7.13 over the three-month period, causing an increase in liquidity from trading in the 21st percentile to the 13th percentile.
Asia:
Halyk Savings Bank of Kazakhstan (FINANCIALS/Banks)
Credit spreads have tightened over the last three months, with the five-year point tightening from 671 bps to 495 bps, a decrease of -26 percent. The liquidity score on Halyk Savings Bank of Kazakhstan increased from 9.47 to 9.61 over the three-month period, causing a decrease in liquidity from trading in the 12th percentile to the 23rd percentile.
Jardine Strategic Holdings Limited (INDUSTRIALS/General Industrials)
Credit spreads have tightened over the last three months, with the five-year point tightening from 76 bps to 59 bps, a decrease of -22 percent. The liquidity score on Jardine Strategic Holdings Limited decreased from 10.36 to 9.48 over the three-month period, causing an increase in liquidity from trading in the 71st percentile to the 65th percentile.
National Australia Bank Limited (FINANCIALS/Banks)
Credit spreads have widened over the last three months, with the five-year point widening from 73 bps to 95 bps, an increase of 31 percent. The liquidity score on National Australia Bank Limited decreased from 9.78 to 9.4 over the three-month period, causing a decrease in liquidity from trading in the 56th percentile to the 58th percentile.
Reliance Infrastructure Limited (UTILITIES/Electricity)
Credit spreads have tightened over the last three months, with the five-year point tightening from 278 bps to 256 bps, a decrease of -8 percent. The liquidity score on Reliance Infrastructure Limited decreased from 10.42 to 10.15 over the three-month period, causing a decrease in liquidity from trading in the 31st percentile to the 33rd percentile.
Sekisui House, Ltd. (CONSUMER GOODS/Household Goods)
Credit spreads have widened over the last three months, with the five-year point widening from 80 bps to 82 bps, an increase of 4 percent. The liquidity score on Sekisui House, Ltd. increased from 10.16 to 10.81 over the three-month period, causing a decrease in liquidity from trading in the 27th percentile to the 44th percentile.
Philippine Long Distance Telephone Company (TELECOMMUNICATIONS/Fixed Line Telecommunications)
Credit spreads have tightened over the last three months, with the five-year point tightening from 152 bps to 144 bps, a decrease of -5 percent. The liquidity score on Philippine Long Distance Telephone Company decreased from 10.78 to 9.5 over the three-month period, causing an increase in liquidity from trading in the 36th percentile to the 22nd percentile.
United Business Media Ltd (CONSUMER SERVICES/Media)
Credit spreads have tightened over the last three months, with the five-year point tightening from 115 bps to 108 bps, a decrease of -6 percent. The liquidity score on United Business Media Ltd decreased from 9.74 to 8.6 over the three-month period, causing an increase in liquidity from trading in the 64th percentile to the 54th percentile.
Fitch Solutions, a division of the Fitch Group, focuses on the development of fixed-income products and services, bringing to market a wide range of data, analytical tools and related services. The division is also the distribution channel for Fitch Ratings content.
The Fitch Group also includes Fitch Ratings and Algorithmics, and is a majority-owned subsidiary of Fimalac, S.A. For additional information, please visit 'www.fitchsolutions.com'; 'fitchratings.com'; 'www.algorithmics.com'; and 'www.fimalac.com'.
((Comments on this story may be sent to newsdesk@closeupmedia.com))
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