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The cost of credit protection on Casino fell on Friday after the French retailer said it wants to sell its Polish operations, believed to be worth at least $1.5 billion.
Sources familiar with the situation said Casino wants cash to lower its debt. The potential investors for the Polish assets - 18 hypermarkets under the Geant brand and 279 Leader Price discount stores - may include Polish market leaders: Britain's Tesco and France's Carrefour, they told Reuters.
The five-year credit default swap of Casino fell as much as five basis points to bid at 62 basis points on Friday afternoon, but rose again to 64 basis points, traders said. That means it costs 64,000 euros to insure 10 million euros of Casino debt against default.
Also in the CDS market, the credit protection cost of Bertelsmann rose after a newspaper report said early on Friday that the German media group is preparing to make a cash offer to a key Belgian shareholder to prevent the family-controlled company from being listed.
Groupe Bruxelles Lambert owns 25 percent of Bertlesmann and can from next week demand an initial public offering of that stake. Estimates in the media of the value of the GBL stake range between 3 billion to 5 billion euros, and the Financial Times Deutschland (FTD) report said Bertelsmann planned to offer GBL between 3.5 billion to 4 billion euros for the stake.
Traders in London said the CDS of Bertelsmann began widening in the morning, even though the stake report was no surprise to the market. As of 1402 GMT, the CDS was almost six basis points wider on the day at 45 basis points.
Elsewhere in the market, the CDS of Arcelor held steady after Mittal Steel raised its offer to acquire the Luxembourg company and dropped a key demand for family control over the combined global steel giant.
"The move was wider in the morning, but it's all come back to unchanged on the day," one credit don said. A second trader said the five-year credit default swap was trading unchanged at 52 basis points on the day.
In a surprise move on Friday, just a day after Mittal launched a hostile take-over for rival Arcelor, the world's largest steel group by volume boosted the total value of its Arcelor bid by 6 billion euros to over 24 billion euros, as it sought to win back eroding investor support. In the cash bond market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 47.5 basis points more than similarly-dated government bonds at 1501 GMT, 0.3 basis point more on the day.

Copyright Reuters, 2006

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