General Motors bond rallies

The cost of default protection on General Motors fell on Friday as investors welcomed comments from the troubled US auto maker's chief executive that the company was unlikely to go bankrupt.
Five-year credit default swaps on financing arm GMAC tightened 60 basis points to 420 basis points, meaning it cost 420,000 euros ($490,900) to annually insure 10 million euros of GMAC debt against default.
"There is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to GM's 325,000 employees on an internal Web site.
"The market sold off a lot until the CEO's comments. What Rick Wagoner said really helped," said a credit trader in London. GMAC's rally also tracked a share price rise in New York, he said.
The news on GM fuelled risk appetite in the wider market, helping push the iTraxx Crossover index, a barometer of sentiment in high yield, some 6 basis points tighter to 293 basis points.
The Detroit News said on Friday that a GM restructuring plan could be announced as early as next week, and might include a series of plant closures and at least 25,000 job cuts.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 39.9 basis points more than similarly dated government bonds at 1530 GMT, 0.2 basis point more on the day.
Credit protection on Danish phone company TDC tightened slightly, a trader said, amid volatile trading as investors speculated over the structure and detail of a bid that may be approved next week.
The Apax consortium has submitted a $11.6 billion offer for TDC, sources told Reuters. The offer corresponds to 380 Danish crowns per share, or 2.5 percent above Thursday's closing share price.
Five-year CDS on the company traded 5 basis points tighter late on Friday at 305 basis points, said a trader.
Elsewhere, default swaps on Swiss Re came under slight pressure after Moody's Investors Service said it may downgrade the company after it agreed to buy General Electric's reinsurance business for $7.6 billion.
Moody's said it was primarily concerned about the execution risks associated with the transaction, particularly Swiss Re's ability to rapidly implement its underwriting and risk management policies at the acquired entity.
Moody's placed its Aa2 insurance financial strength and senior debt ratings on Swiss Reinsurance Co, as well as its A1 subordinated debt rating, on review for possible downgrade.
Five-year senior default swaps on the reinsurer's subordinated debt widened 3 basis points to 42 basis points, a trader in London said.
Europe's biggest tourism firm, TUI, is expected to begin roadshows next week for a two-part senior bond and a hybrid perpetual note, a market source said on Friday. TUI said on Thursday it planned to sell 1.0 billion euros of high-yield notes to part-fund its purchase of container shipping company CP Ships.
The deal is expected to be split between 700 million euros of a two-part senior bond, divided into a five-year floating rate tranche and a seven-year fixed rate tranche, the source said.