Halliburton: good things come to those who wait

Apparently, Halliburton’s $34.6bn acquisition of Baker Hughes was a blundered — and costly — deal by the oil services company.

The business press (the FT included) have been brutal in their assessment. My colleagues on Lex, with characteristic subtlety, rebuked Halliburton for creating a bad acquirer template. Others simply said the price, which represented a 54 per cent premium, was too high. The smack-down seemed to top out on Wednesday, when the Wall Street Journal declared Halliburton’s as the worst received deal of the year. Read more

Tchenguiz vs Grant Thornton

Is Vincent Tchenguiz the greatest legal mind of his generation? Almost certainly not. But his determination, evocative of a children’s game show contestant, is formidable.

Indeed, since being wrongfully collared by the SFO in early 2011 as part of their investigation into Kaupthing, the failed Icelandic bank, Tchenguiz has treated the hallowed workshop of British justice as his private version of Fun House, the 90s after-school TV hit that reflected a generation’s E-number giddiness. In the place of mulleted perma-enthusiast Pat Sharpe, a team of luxuriantly wigged QCs have watched Tchenguiz charge gleefully through the courts, snatching up legal goodies. Read more

About that M&S bid rumour …

The universe is for sale. Haven’t you heard? It was on the front page of the FT, so it must be. Apparently the Qataris are favourite to buy it. Read more

CDS report: iTraxx backtracks

European CDS indices have finally returned to pre-Lehman levels, as the continent’s equity rally, which is enjoying its seventh consecutive session, helped squeeze spreads tighter.

The Markit iTraxx Europe index, which tracks the 125 most liquid names in the investment-grade class, has fallen below the psychologically important 100 basis points mark for the first time since September 2008.  By mid-morning the index was trading at 99.35bp bid and 100.35bp offered. Read more

CDS report: Ireland drifts wider

The cost of insuring against the possibility of the Irish government defaulting on its debt rose sharply on Monday morning, following news that Standard & Poor’s had lowered the country’s credit rating for the second time in less than three months.

The rating agency, which in March stripped Ireland of its triple-A status, explained the cut to AA from AA+ as being based on concerns over the long-term fiscal stability of the euro zone nation: Read more

CDS report: Floored rally?

The cost of buying protection against default on investment-grade bonds in Europe continued to fall early on Wednesday despite a slight drop in the continent’s main equity markets.
The flagship Markit iTraxx Europe, which tracks the 125 most liquid names in the high-grade sphere, continued this week’s tightening trend shedding three basis points to trade at 102bps.

Some analysts predicted the index might even fall below the psychologically important 100bps floor later in the day – a level not seen since before the collapse of Lehman in September last year.  However, they warned the market was becoming close to being over-priced and suggested economic conditions were still far too uncertain to erase risk premia. Read more

CDS report: Risk appetite returns

A growing appetite for risk in Europe was apparent on Tuesday morning, as the stream of positive economic data flowing from the US and Europe indicating that the contraction in the global economy might ease sooner than expected helped push credit derivative indices tighter.

The main iTraxx Europe index, which tracks the 125 most liquid names in the investment grade class, tightened by 4 basis points to trade at 108bps, down from 112bps late on Friday. Read more

CDS report: Compression session

The appetite for risk in Europe rose slightly on Monday morning as stocks rallied on continuing hopes for a sustained global economic recovery, stoked in part by strong data from China.

The Markit iTraxx Europe index, which tracks the 125 most-traded investment-grade names, was trading at 116 basis points midday Monday, down from 120bps late on Friday and some way below the near 140bps it reached early in May, according to data from Markit.
The Markit iTraxx Crossover index, made up of the 45 most heavily traded junk-rated entities, also narrowed to trade around 708bps, down from 724bps at Friday’s close. Read more

CDS report: Auto-mobility

Appetite for risk in European credit markets receded on Thursday, tracking jitters in global stocks which were themselves reacting to a jump in yields on government debt and poor US housing data.

An overnight sell-off in US stocks followed investor concerns that increasing yields on Treasury bonds would lead to higher borrowing costs across the economy. Read more

CDS report: Tokyo trend continues

The appetite for risk in Japan continued to grow on Wednesday, with the benchmark index for the country’s credit default swaps tightening for a seventh consecutive session.

The iTraxx Japan Series 11, which includes the 50 most traded investment-grade entities, ended the day at 165 basis points, ten points lower than late on Tuesday, with some analysts predicting that it could go as low at 150bps on Thursday. Read more

CDS report: Market steels wider

The cost of insuring against the possibility of default on European corporate bonds rose slightly on Tuesday,  in spite of a growing number of high grade companies seeking to raise funds in the market.

ArcelorMittal, the world’s largest steelmaker, announced plans to raise E2.5bn via issuance of a dual-tranche eurobond, comprising 4-year and 7-year options. The move follows similar ones from a raft of companies, including French cement group Lafarge and Carlsberg Breweries, entering the market last week, in a sign of growing optimism in economic conditions. Read more

CDS report: Rally loses steam

The appetite for risk in Europe waned on Wednesday morning, as the effects of the previous day’s rally began to peter out amid poor economic data from Japan.

The Markit iTraxx Crossover index, which tracks the cost of insuring against the possibility of default by the 45 most traded names in the junk-rated sphere, continued to tighten. By midday it was trading at 743 basis points, down from 759bps late on Tuesday, according to data from Markit. Read more

CDS report: Factoring in ‘feel good’

The cost of insuring European corporate debt against default dropped sharply on Tuesday, as credit spreads tightened amid a rally in global equity markets and rising sentiment that the recession may have passed its peak.

The recent spate of companies seeking to tap the bond market gained weight as more investment-grade names lined up to take advantage of the more positive mood sweeping over the financial markets. Read more

CDS report: Porsche races wider

Having  fallen steadily last week, the appetite for risk in Europe wobbled on Monday as a raft of investment-grade companies sought to raise money in the bond market.

Non-financial investment-grade companies have already raised €153bn this year, leaving issuance just €13bn short of making 2009 the second strongest year ever for the eurobond market. Read more

CDS report: No victory for V

European credit spreads continued to widen on Thursday, as appetite for risk sunk on the back of negative retail data from the US which dented hopes of a recovery in the economy.

Having moved as low as 740 basis points earlier this month, the Markit iTraxx Crossover index, which tracks the 45 most liquid names in the high yield bracket, continued to widen and was trading at 810bps points, 7bps up on Wednesday’s close. Read more

CDS report: Mixed blessings

The appetite for risk in Japan rose sharply on Wednesday, as the market responded positively to a growing optimism on Tokyo stocks. The cost of protecting against default on Japanese corporate bonds fell to a six-month low.

Investors, concluding that bad news flowing from the banking and auto sectors was drying up, pushed the iTraxx Japan Series 11, the benchmark CDS index comprising the top 50 investment-grade entities, tighter to 215 basis points, compared to a Tuesday close of 250bps. Read more

CDS report: Stress test hangover

The appetite for risk in Europe dwindled on Tuesday, before finding fresh impetus as the market for insuring against the possibility of corporate default fluctuated in the wake of global equity movements.

Early in day the market continued to shed recent gains, with weakening stock prices in the US and Asia pushing CDS spreads wider, before clawing back some ground on strengthening European equities.Having traded as low as 730 basis points last week, the Europe Markit iTraxx Crossover index, which tracks the cost of insuring the debt of the 45 most traded names in the sub-investment-grade class, was 70 bps wider on Tuesday morning, at 800 bps. Read more

CDS report: A reversal of trend

European credit markets saw an abrupt trend reversal on Monday as the cost of protecting against default on a range of higher-risk corporates widened suddenly after a week of falling prices.

Having tightened by almost 80 basis points last week, the Europe Markit iTraxx Crossover index, which tracks the 45 most liquid names in the junk-grade sphere, reflected a receding appetite for risk and fresh worries about a jump in corporate defaults later in the year. The Crossover, which had touched a low of 730bps last week, was trading at 755bps during early trade on Monday – 15bps wider than Friday’s close.  Read more

CDS report: “Mr Geithner has said the world will be fine”

The cost of insuring against the possibility of default on Japanese bonds fell dramatically on Thursday, as the market reopened after a three-day holiday to greet a wave of positive sentiment. Tightening in the CDS market was accompanied by sharp gains amongst Japanese equities amid optimism that the country’s economy was beginning to shake off the worst of the global recession.

The iTraxx Japan Series 11, which comprises 50 of the top investment-grade Japanese entities, traded at 225 and 263 basis points, significantly lower than Friday’s level of 320bp and less than half the the 565bp level seen in mid-March. Read more

CDS report: A tightening trend

The cost of buying protection against default on investment-grade bonds in Europe decreased slightly on Wednesday, as spread indices tightened after initially increasing in anticipation of the release of the US bank stress test results on Thursday.

The Markit iTraxx Europe index, which tracks the 125 most-liquid investment grade names in Europe, was trading at around 134 basis points, 4.50bp tighter than Tuesday’s close. Read more