Pension deficit concern sparks demand for default protection

Traders saw a marked increase in volumes for credit protection, following a credit watch alert by rating agency Standard & Poor’s (S&P) on 12 major European corporations earlier today. S&P today warned that the companies, including Sainsbury’s, Rolls-Royce and Thyssen Kruppp, may have their credit ratings cut due to concerns over deficits in their pension funds.

The largest mover was Rolls-Royce, traders said. The cost of the British company’s five-year credit protection widened nearly 20bp today to 250/270bp. Other names saw increased activity but limited spread movement. “In recent weeks credit default swap prices have been trading tight relative to falling equity prices,” said one trader. “If spreads do start to edge out, this could signal a re-coupling between the equity and credit markets.”

A number of 30-year bond issues in the European utilities

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Register

Want to know what’s included in our free membership? Click here

This address will be used to create your account

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here