Bonds: Ford rally continues

The cost of default protection on Ford Motor Credit fell on Wednesday, extending its recent rally, amid continued speculation about a possible sale of the unit. Elsewhere, the European credit market edged tighter, with few single-name credit moves catching traders' attention.
Troubled US automaker Ford's finance unit has been the subject of intense speculation in the past week, after a media report said it was launching a strategic review of its operations.
Five-year credit default swaps on Ford Motor Credit traded 15 basis points tighter at 385 basis points, some 65 basis points less than before the speculation started, a trader said.
Ford has been struggling with declining US sales and was pushed last month into the No 2 automaker spot for the first time, after being overtaken by Japan's Toyota Motor Corp.
Default swap spreads on GMAC, the finance arm of rival General Motors Corp, also narrowed, trading some 5 basis points tighter at 195 basis points, the trader said, while Ford Motor Company was 15 tighter at 680 basis points. "The vast majority of the activity is in FMCC and the others are rallying in sympathy," the trader said.
Elsewhere in autos, five-year swaps on Volkswagen were little changed at 24 basis points, said another trader, as investors shrugged off speculation Porsche might expand its stake.
In telecoms, credit default swaps continued to grind tighter, a second trader said.
"On the CDS we're a basis point better across the board," he said. Five-year credit default swaps on Telecom Italia were 1 basis point tighter at a 54 basis point mid-price, he said.
Five-year credit default swaps on TeliaSonera were active, he added, trading up at 32 basis points, before settling at 30 basis points, 1 basis point tighter on the day. In the wider market, the iTraxx Crossover index, made up mainly of high-yield credits, was indicated at a 264 basis point mid-price, an index trader said, 3 tighter on the day.
"It's all a tiny bit firmer," he said, "There are not really any single-name stories." The theme was similar in the cash bond market, with the FTSE Euro Corporate Bond Index showing investment-grade corporate bonds in euros yielding an average 52.2 basis points more than similarly dated government bonds at 1437 GMT, 0.2 basis points less on the day.
In the high-yield market, Travelport, the former travel distribution services unit of Cendant. Corp, set guidance on $1.4 billion worth of bonds it plans to issue to fund its leveraged buyout, a banking source said.
Order books close on Thursday, and pricing is due on Friday during the New York morning, the source said.
Blackstone Group agreed to buy Travelport from Cendant in June for approximately $4.3 billion in cash. Lehman Brothers, Credit Suisse, UBS, Citigroup and Deutsche Bank are managing the bond sale.
And Irish phone group Eircom is set to price its high-yield floating-rate note on Thursday, a banking source said on Tuesday.
The 10-year, 350 million euro FRN will help finance Eircom's acquisition by a consortium led by Babcock & Brown Capital, the source said, and is set to yield 500 to 525 basis points over Euribor.