Credit default swaps on France's Valeo soared on Friday, after the car parts group confirmed it had received a bid approach, while carmaker DaimlerChrysler's CDSs tightened on hopes it is close to selling its Chrysler unit.
Valeo said the take-over approach was not hostile and denied speculation that the company's management was engineering a buyout. A source familiar with the matter told Reuters on Thursday that US fund Apollo Investment Corp was considering a bid for the entire company. Five-year credit default swaps on Valeo widened 30 basis points to 125 basis points, the trader said.
The cost of insuring the debt of DaimlerChrysler fell, on speculation the disposal of its loss-making Chrysler unit is imminent. Five-year credit default swaps on Daimler Chrysler fell 8 basis points to a 33.5 basis point mid-price, a trader said. A DaimlerChrysler spokesman said there was nothing new to announce on the matter.
Credit default swaps on retailer Carrefour also fell, after sources close to the matter said its largest shareholder, the Halley family, has no plans to sell its stake.
Default swaps had earlier widened on a French newspaper report that the Halley family had asked banks HSBC and Lehman Brothers to look at what options the family has for its holding in the French retailer. Five-year default swaps were 4 tighter on the day at 29 basis points having earlier traded as wide as 38 basis points, a trader said.
Five-year credit default swaps on pharmacy chain owner Alliance Boots widened 5 basis points to 150 basis points on renewed talk of a higher bid, a third trader said, though a source familiar with the matter said there was nothing imminent.
The iTraxx Crossover index, made up of mainly high-yield credits and seen as a key marker for risk-appetite, widened 2 basis points to 221 basis points, a second trader said. In the cash bond market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 46.1 basis points more than similarly-dated government bonds at 1527 GMT, 0.5 basis points less on the day.