Credit default swaps on TDC gave up some of their gains on Wednesday after sources denied a newspaper report that Denmark's leading telecoms operator was in talks for a loan to fend off private equity bids.
TDC has been the most actively traded name in Europe's credit default swap market for months as investors fretted about a possible debt-heavy leveraged buyout (LBO) by private equity groups.
"TDC has been moving a lot today. It tightened about 30 to 40 basis points this morning, but just got wider," said a credit trader in London.
He said the CDS of TDC was still 10 basis points tighter on the day at 1501 GMT. The 275 basis points price means it costs 275,000 euros to insure 10 million euros of TDC debt against default.
Elsewhere in the market, US auto makers took a break from recent volatility to trade little changed ahead of the Thanksgiving holiday on Thursday.
Five-year default protection on GMAC, the financing arm of General Motors was 5 basis points wider, bid at 420 points, he said.
The CDS of General Motors was bid at 16 percent of face value on an upfront basis, little changed on the day. Dealers quote an upfront price where there is more concern the company may default over the life of the contract.
General Motors, with $103 billion of bond debt denominated in all the major currencies, is a bellwether for the credit markets. The world's largest auto maker has been beset by problems in recent years, including losing market share to Asian rivals and growing pension and healthcare burdens.
The company's downgrade to "junk" status in May sparked a sell-off in bond markets, and led to pressure for the automaker to spin off its profitable financing operation GMAC.
In the cash bond market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 40.7 basis points more than similarly dated government bonds at 1600 GMT, 0.3 basis point less on the day.
The new bond market was busy, as well-established bond issuers took advantage of low interest rates before year-end.
France Telecom sold a 350 million pound ($602.1 million) bond due December 2025 on Wednesday.
The bond offered a yield of 105 basis points over Gilts, in line with earlier price guidance.
Dresdner Kleinwort Wasserstein, HSBC and Royal Bank of Scotland are managing the deal. Also from France, Carrefour, the world's second-biggest retailer, sold a 750 million euro ($882.5 million) bond due May 2013, one of the banks managing the deal said.
The bond pays a coupon of 3.625 percent and was sold at 99.308 percent of face value to yield 31 basis points over swaps, or 43.4 points over equivalent government debt, the bank said.
The spread is wider than original guidance of "high 20s" basis points over swaps - usually a signal investors were unhappy with the original spread offered.
CSFB, Deutsche Bank, HSBC and Societe Generale managed the deal.
In the asset-backed pipeline, Italian social security agency INPS's 5 billion euro securitisation of social security contributions in arrears is moving ahead. The bond sale would help Italy trim its massive public debt.
A market source said the series 7A notes, worth 1.925 billion euros, will offer a 2.65 year maturity and a spread of 10 basis points over 6 months Euribor.
The series 9 notes will offer a 4.65 year maturity and a spread of 12-13 basis points over 6 month Euribor. The series 10 notes, with 5.65 year maturity, will offer a spread of 'low teens' over the 6 month Euribor.
The lead managers for the triple-A-rated bond sale are MCC, SG CIB and UBS.
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