Bonds: Sainsbury recovers

The cost of credit protection for J. Sainsbury eased on Monday afternoon, but still rose on the day after the British supermarket chain said its profits would be weaker than expected.
"European investor are in holiday mode, most of the activities are in Sainsbury," said a bond trader in London.
There is a US market holiday on Monday. Credit default swaps for Sainsbury were trading at 125 basis points late Monday, about seven basis points wider on the day, but about five basis points tighter than the morning level of 130 basis points. It costs 125,000 euros to insure 10 million euros of Sainsbury debt from default.
Sainsbury said earlier on Monday it expects first-half profits to fall nearly two-thirds from last year, as it bleeds market share to rivals and reels from an exodus of top staff.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 46.3 basis points more than similarly dated government bonds at 1501 GMT, 0.3 basis points less on the day.
General Motors' widely held 8.375 percent euro bond due in July 2033 was unchanged at 277 basis points over government debt.
The new bond market, however, was active. Italian power grid firm Terna is launching a bond to pay off debt it owes to parent utility Enel.
The 10-year tranche of Terna's planned bond, worth total up to 1.4 billion euros ($1.74 billion), is likely to yield 22-25 basis points over midswap, sources close to the deal said on Monday. The 20-year tranche is seen yielding 38-40 basis points over midswap, the sources said. Pricing is expected later this week. CSFB, JP Morgan and UBS are joint lead managers.
GE Capital UK Funding, a unit of conglomerate General Electric Co, plans to re-open its 4.750 percent sterling-denominated bond due in December 2010, joint bookrunners Goldman Sachs and HSBC said on Monday.
The deal, which is unconditionally guaranteed by General Electric Capital Corp (GECC) will be priced later this week, subject to market conditions, the banks said.
GE Capital UK Funding is rated triple-A by both Moody's Investors Service and Standard & Poor's.
Also in the primary market, Franco-Belgian bank Dexia-Crediop's Italian unit is preparing to launch a bond linked to the price of oil, the first oil price-linked public bond to be issued in Italy, the bond's arranger UBM said on Monday.
The bond, to be sold to Italian investors, is expected to be worth up to 250 million euros ($310.2 million), said sources close to the deal.
The five-year bond will pay a 1.5 percent annual coupon, along with a percentage of the increase in prices for Brent oil, UBM said in a statement.
Also from Italy, IT Holding, which owns the Gianfranco Ferre clothing label, is preparing a eight-year, 185 million euro bond. Callable from the fourth year, the high-yield bond will have a coupon of 8.75-9 percent, with a yield in the 8-10 percent range.