NEW YORK--()--Substantially wider credit default swap (CDS) spreads for Computer Sciences Corporation (CSC) are indicating rising market concern over recent overseas and legal developments, according to Fitch Solutions in its latest earnings commentary.
“The markets are likely jittery over the UK government's rejection of CSC's memorandum of understanding with the National Health Service, potential reductions in orders as well as ongoing legal issues,' said Author and Director Diana Allmendinger.”
CDS for CSC (reporting this morning) have widened 82% over the past three months, far outpacing the 2% widening for the broader North America technology sector. Despite 25% tightening over the past month, markets are now pricing credit risk for CSC wide of 'BB-' levels. Further signs of stress are evident in its CDS liquidity, which has jumped five rankings to trade in the fourth regional percentile. "The markets are likely jittery over the UK government's rejection of CSC's memorandum of understanding with the National Health Service, potential reductions in orders as well as ongoing legal issues,' said Author and Director Diana Allmendinger.
Elsewhere, spreads on Amkor Technology, Inc. (reporting tomorrow) have rallied 31%. After having priced wide of 'B' levels in early November, markets are now pricing credit risk for Amkor in 'B+' space. CDS liquidity has remained largely unchanged, pricing in the 27th regional percentile.
Companies reporting this week include the following:
Amkor Technology, Inc. (TECHNOLOGY/Technology Hardware & Equipment)
Credit spreads have tightened over the last three months, with the five-year point tightening from 637 basis points (bps) to 440 bps, a decrease of -31%. The liquidity score on Amkor Technology, Inc. increased from 7.29 to 7.32 over the three-month period, causing a decrease in liquidity from trading in the 26th percentile to the 27th percentile.
Cisco Systems, Inc. (TECHNOLOGY/Technology Hardware & Equipment)
Credit spreads have tightened over the last three months, with the five-year point tightening from 100 bps to 87 bps, a decrease of -13%. The liquidity score on Cisco Systems, Inc. decreased from 7.86 to 7.65 over the three-month period, causing an increase in liquidity from trading in the 41st percentile to the 35th percentile.
Computer Sciences Corporation (TECHNOLOGY/Software & Computer Services)
Credit spreads have widened over the last three months, with the five-year point widening from 230 bps to 418 bps, an increase of 82%. The liquidity score on Computer Sciences Corporation decreased from 6.74 to 6.39 over the three-month period, causing an increase in liquidity from trading in the ninth percentile to the fourth percentile.
CVS Caremark Corporation (CONSUMER SERVICES/Food & Drug Retailers)
Credit spreads have tightened over the last three months, with the five-year point tightening from 65 bps to 52 bps, a decrease of -21%. The liquidity score on CVS Caremark Corporation decreased from 6.99 to 6.81 over the three-month period, causing an increase in liquidity from trading in the 16th percentile to the 12th percentile.
Gannett Co., Inc. (CONSUMER SERVICES/Media)
Credit spreads have tightened over the last three months, with the five-year point tightening from 380 bps to 299 bps, a decrease of -21%. The liquidity score on Gannett Co., Inc. decreased from 7.12 to 6.96 over the three-month period, causing an increase in liquidity from trading in the 21st percentile to the 16th percentile.
Kimco Realty Corporation (FINANCIALS/Real Estate Investment Trusts)
Credit spreads have tightened over the last three months, with the five-year point tightening from 200 bps to 160 bps, a decrease of -20%. The liquidity score on Kimco Realty Corporation increased from 7.01 to 7.29 over the three-month period, causing a decrease in liquidity from trading in the 17th percentile to the 26th percentile.
Lincoln National Corporation (FINANCIALS/Life Insurance)
Credit spreads have tightened over the last three months, with the five-year point tightening from 332 bps to 260 bps, a decrease of -22%. The liquidity score on Lincoln National Corporation increased from 6.65 to 7 over the three-month period, causing a decrease in liquidity from trading in the seventh percentile to the 18th percentile.
Louisiana-Pacific Corporation (INDUSTRIALS/Construction & Materials)
Credit spreads have tightened over the last three months, with the five-year point tightening from 361 bps to 262 bps, a decrease of -27%. The liquidity score on Louisiana-Pacific Corporation increased from 6.87 to 6.98 over the three-month period, causing a decrease in liquidity from trading in the 13th percentile to the 17th percentile.
Pitney Bowes Inc. (TECHNOLOGY/Technology Hardware & Equipment)
Credit spreads have widened over the last three months, with the five-year point widening from 211 bps to 275 bps, an increase of 30%. The liquidity score on Pitney Bowes Inc. decreased from 6.93 to 6.78 over the three-month period, causing an increase in liquidity from trading in the 14th percentile to the 11th percentile.
Pepsico, Inc. (CONSUMER GOODS/Beverages)
Credit spreads have widened over the last three months, with the five-year point widening from 51 bps to 62 bps, an increase of 22%. The liquidity score on Pepsico, Inc. decreased from 7.54 to 7.42 over the three-month period, causing an increase in liquidity from trading in the 33rd percentile to the 30th percentile.
Sprint Nextel Corporation (TELECOMMUNICATIONS/Mobile Telecommunications)
Credit spreads have tightened over the last three months, with the five-year point tightening from 876 bps to 857 bps, a decrease of -2%. The liquidity score on Sprint Nextel Corporation decreased from 7.17 to 6.97 over the three-month period, causing an increase in liquidity from trading in the 22nd percentile to the 16th percentile.
Time Warner Inc. (CONSUMER SERVICES/Media)
Credit spreads have tightened over the last three months, with the five-year point tightening from 74 bps to 57 bps, a decrease of -22%. The liquidity score on Time Warner Inc. increased from 6.92 to 7.18 over the three-month period, causing a decrease in liquidity from trading in the 14th percentile to the 23rd percentile.
Universal Corporation (CONSUMER GOODS/Tobacco)
Credit spreads have tightened over the last three months, with the five-year point tightening from 273 bps to 224 bps, a decrease of -18%. The liquidity score on Universal Corporation decreased from 7.05 to 6.99 over the three-month period, causing an increase in liquidity from trading in the 18th percentile to the 17th percentile.
Prudential Financial Inc. (FINANCIALS/Life Insurance)
Credit spreads have tightened over the last three months, with the five-year point tightening from 239 bps to 208 bps, a decrease of -13%. The liquidity score on Prudential Financial Inc. decreased from 6.41 to 6.41 over the three-month period. The regional percentile ranking stayed the same
Sealed Air Corporation (INDUSTRIALS/General Industrials)
Credit spreads have tightened over the last three months, with the five-year point tightening from 281 bps to 213 bps, a decrease of -24%. The liquidity score on Sealed Air Corporation increased from 7.15 to 7.15 over the three-month period. The regional percentile ranking stayed the same
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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 is a majority-owned subsidiary of Fimalac, S.A. For additional information, please visit 'www.fitchsolutions.com'; 'www.fitchratings.com'; and 'www.fimalac.com'
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