Traders comments

Mike Xifaras: Tier 1 Perps

surprisingly busy day given the U.S. was out. LLOYDS was the most traded name as the company upsized its £/euro ECN issue to £7bn which boosted the 13% deal 9 points to 123. the other LLOYDS deals were unchanged and i'll buy some here (3 points below exchange). saw continued buying of the big step deals eg ACAFP 7.875 BBVASM 8.5 ISPIM 8.375 SOCGEN 9.375 which also dragged ISPIM 8.047 higher to 100.75 from 99.75. traded BACR 4.75 and 7.5 and left a buyer of both. BNP remains better offered in most maturities. BPCEGP 9.25 is just off its 95 low. traded 5m BPCEGP 6.117 today - follow is 73.25/74.25. traded CMZB 5.012 between 44 and 45 left a 44 buyer. I traded DPB 5.983 at 64, HVB 7.055 between 86 and 87 left 86.25 buyer. bought ISPIM 8.126 at 97 pay on - and sold RBS 7.092 - left 43 bid. picked up SEB 7.092 and can sell at 85.5 (the 9.25 is up 1/4 pt today). Bought SOCGEN 5.419 again at 82.5 and pay. picked up UBS 8.836 and i'll sell them at 97. overall the market feels around half a point better in liquid names and unchanged in illiquid.

David Forgash: Autos/Retailers

Full bull mode. We rallied once again, with cash 5bps tighter virtually across the board. Though I was lifted out of chunks of auto and retail paper, by far the most active was the new Fiat '15 deal. After dropping 1/2 pt yesterday in the grey, we opened down another 1/4 today before the flippers exhausted and the retail engine kicked in. The deal ended up closing at 99 7/8 with what appeared like the leads trying to cover syndicate shorts with deep bids. Adding up the blotter, we traded over 100mm of the bond. It feels like the deal is in much better shape at this point. I think that as we get above par we're likely to see cds get smacked down to the mid 250's. You can't argue with the stellar numbers the company has seen out of Brazil (+47%), and that is as big a market to them as the whole of Italy. I like that long trade. Another favourite long, CONTI, closed 15bps tighter. In airlines, BAB was put on watch neg at Moody's. CDS closed virtually unchanged at 500. Retail is pretty quiet, though I'm starting to reload in a few tight cds names such as Tesco. I also think a short in MRWLN has very good upside in the high 50's. Dixons went from spread to point to spread trading in a 60bp range today (880-940). Clearly a lot of bets are being placed on the xmas season. Not a ton of conviction, but I'm certainly too scared to be long the credit.


Gareth John: TMT

Reed pre-released Q3 statement this morning although had no numbers in it. Said 1H trends (org rev -7%) have broadly carried into 2H. Outlook disappointing talking of "late cycle" effects and "further margin declines next yr". Also CEO has left after only 8mnths. Overall negative and Reed cds was 5bps wider 65/70. We continue to like short reed/long pson 5y, differential now 16/19 (reed above). Bertel results good with 3Q rev only -4.5% compared to the 7% drop in 2Q. Also is cutting costs well to inc margin to 7.9%, up 1.3% yoy. 5y cds was unch at 165/175 and seeing better byrs at these levels, it is now in around 70bps in the last month and we see cds as equal weight now. CDS generally quiet today but bonds active, seeing a few real money acc's start peeling off blocks of tmt where they see little value left, and taking some profits in new issues telefo 19s b+118/116 portel b+158/156 both unch today after tightening 2bps a day over the last week.

Gareth John: Metal/Miners/Builders

Holzsw results beat, with rev inline but ebitda ahead by 11%. Net lev of 2.8x unch. 5y cds 5bps tighter at 113/118, we think it's the strongest credit vs peers but looks fully valued here. We like long holzsw vs short Sgofp, as sgofp fundamentals will continue thanks to exposure to W.Eur property. SGOFP 5y 115/120 [-3]. Other cds drifted tighter with Xtaln 5y 174/179 [-2] Aalln 138/143 [-2] Gleint 210/215 [-5] lgfp 180/185 [-5], with the street a keen seller of protection.


Irena Tzekina: Chemicals/Food

Very slow day with the US and parts of Europe out. CDS marginally tighter on very low volume; curves continue to trade; front end has steepened somewhat over the past couple weeks. In cash, the new Cokes continue to quietly move tighter driven by retail buying; DCPRIM also getting picked at. Hit small Dow 11s, looking for more, same goes for LXSGR 12s. Traded some BASGR 14, 2 more to go at 85, CARLB (unch), HEIANA 14 (cheapest bond on the curve), and EVONIK (pay 350 for a few). Looking forward to having more market participants tomorrow. Night, Irena

Kevin Edwards: € Insurance

Active in insurance cash today with sub bonds up 1/2 to 1 pt and senior bonds 2-5 bp tighter.With earnings continuing to come in strong and the equity market stabilizing we saw better buying from institutional and retail customers. We were active in Swiss Life on the back of strong numbers and most importantly improved solvency. Names that continue to look cheap to us include Swiss Life, OLDMUT LT2, CLMD UT2, and INTNED LT2.

Nikhil Sethi: € Financials

Good 2way flows today (1:1 buys/sells). The new ANZ 2 5/8 12 performing well on very good flow (traded >75MM today, we closed +92 1/2/92, -2bps) and as anticipated, retail loving the deal. Additionally, LLOYDS Snr (?) paper caught a bid after ECN/ECA conversion terms revised favourably for T1/UT2 bonds. LLOYDS 19s closed +182/80 (-3), 16s +190/189 (-2), 14s traded up @ +164, lft 166/64 (-1), better slr, LT2 5 5/8 13-18s still sticky closing +547/537 (+3). Seeing buyers of all Ozzie names in LT2 land; CBA 19s lifted @ +165, lft 168/64 (-3), ANZ 19s closing +167/64 (-1), NAB 18-23s +204/194 (-2). UT2 names been relatively quiet w/ exception of HBOS 5 1/8 49 that are nigh on impossible to source (77-80, +2pts) w/ scrap retail selling.

Anthony Wainer: HY TMT

My market was focussed today on the aftermath of the WDAC call ...

..yesterday when the CEO stated that WDAC would pay their Dec01 coupon payment, this is eur22mm out the business. He also made reference to an eur18mm payment on a short dated cross currency swap. I believe these payments would be value destructive to the senior parts of the capital structure, as the sub bonds are quite clearly out of the money in this stressed captial structure. The bonds rallied from a low of 9/11 pre call, to close 14/16 post call yesterday, today they drifted lower all day to close 12/14. The loans rallied a touch today to close 60/62 from the lows of 58/60 yesterday. Strange behaviour from a cap structure that really believes that the coupon would be paid. I'm negative on bonds and loans at these levels and would be looking for lower levels to get back involved in the loans. In the rest of the directory secotr, Yell paper closed up another point, with the As closing 81/83. SEAT was marginally higher at the sub bond entity although I did pick up some scrappy sellers into the close.

Sylvain Lebre: Indices

As expected this was a very quiet session as most people were out. Deep offer on Xover throughout the day with a quick incursion sub 500. Stocks coming back a little made us widen slightly to close very close to unch but not on genuine flows, more on reversal of the day punters hits so tough to draw a line. Overal we actually bought protection on Xover. Main more resilient, at the tights we had genuine profit taking buyers than same story than xover but with a good offer going out as we are unch on the day with US market very offered on tuesday. Curves muted. Fins ok bid still. Good evening. Sylvain

Benjamin Hasted: Eurosterling

The market in financials today was very firm, both in sub and senior paper - even before the latest Lloyds announcement. Sub insurance paper has been particularly well bid, and with the LGEN news we saw a further move of ~4pts higher in the T1 and UT2s, e.g. LGEN 6.385s closed 74/78 [+4].

Of course, Lloyds upsizing their £/€ ECN issue to £7bn was the big news of the day. This mattered most to 3 groups: i) those that were previously on the cusp in terms of the waterfall, which are now certain to be exchanged (if desired) [e.g. the 13% 2019-call perps]; ii) those that were previously considered unlikely to be included as they were too far down the waterfall, but now are on the cusp [most obvious example being the 13% 2029-call perps]; and iii) those bonds so far down as to not be considered to be exchanged, which now have a chance (even if small) [e.g. HBOS 7.286 and 7.281s].

The first group didn't react too much, as they were considered likely to be taken out anyway, LLOYDS 13% 19s closed +1 1/2at 120 1/2/121 1/2. The third group felt a bit more positive push, e.g. the HBOS 7.286s closed 75/77 [+4] and the HBOS 7.281s at 73/75 [+3]. Finally, however, it was the 2nd group - namely the 13% 2029s that really felt the heat - these went from being unlikely candidates, to likely candidates and so rallied 8pts to close 125/126 1/2. ECN- equiv yields tend to be around 11% for those sure to be exchanged, increasing towards 12% for the more cuspy issues. Within those high on the waterfall, I was most active in the LLOYDS 7.834s, closing them 89 1/2/90 1/2.

Corporates, meanwhile, were very strong, with full offer side lifts prevalent and a couple of reaches for paper from those taken short. Particularly active names on this desk included MKS (11s 280/270), GFSPLN (19s 207/197), GSK (39s 104/94), WELLTR (36s 78/70) and NGGLN (38s 113/105). Also saw prints across the curve in FGPLN, 19s 245/235, 21s 240/230 and 24s 240/230. Will leave it there, been a long day! Have a good evening... Ben