Private equity bid rumours sparked activity on a few individual European credit derivatives in an otherwise quiet market on Friday.
The cost of insuring the debt of Ladbrokes fell after the company’s chief executive quashed rumours of a private equity bid for the UK bookmaker. The company’s five-year credit default swap, a kind of insurance against the non-payment of debt, fell 10 basis points to150bp, meaning it now costs €150,000 annually a year to insure €10m of Ladbrokes’s debt against default in a five-year contract.
Last week, the company’s CDS rose following rumours of a bid by Apax, but Chris Bell, the chief executive of Ladbrokes told Reuters on Friday: ”It’s absolute rhubarb.”
The CDS of Cadbury Schweppes, the drinks and sweets group, rose 2bp to 39bp, following a report in the Daily Telegraph saying that two private equity consortiums were preparing bids for its US drinks division.
Volumes in the European credit derivatives market were generally thin. The iTraxx Crossover index of junk-rated credits opened slightly wider at 203.5bp.