Fitch Solutions: Allstate CDS Slump 40%; MetLife & Prudential Outperforming

NEW YORK--(BUSINESS WIRE)-- Trends among the U.S.' largest insurance companies are traveling divergent paths, as recent credit default swap (CDS) spreads can attest, according to Fitch Solutions in its latest earnings commentary.

CDS on Allstate (reporting Wednesday) have widened 40% while CDS liquidity has increased, moving up four rankings to trade just outside the Top-Fifth percentile of the most liquid companies. 'Much of AllState's sell-off may be attributed to a market correction after rapid spread tightening for the insurer late last year,' said Managing Director Jonathan Di Giambattista.

In contrast, MetLife (CDS 26% tighter) and Prudential (29% tighter CDS) are both outperforming the broader insurance industry. 'CDS tightening and decreased CDS liquidity, while signaling credit strengthening for MetLife and Prudential, may signify a market correction following major sell-off periods over the past two years,' said Di Giambattista.'

Allstate Corporation (The) (FINANCIALS/Nonlife Insurance)

Credit spreads have widened over the last three months, with the five-year point widening from 66 basis points (bps) to 93 bps, an increase of 40%. The liquidity score on Allstate Corporation (The) decreased from 7.32 to 7.14 over the three-month period, causing an increase in liquidity from trading in the 10th percentile to the sixth percentile.

American Axle and Manufacturing, Inc. (CONSUMER GOODS/Automobiles & Parts)

Credit spreads have tightened over the last three months, with the five-year point tightening from 508 bps to 386 bps, a decrease of -24%. The liquidity score on American Axle and Manufacturing, Inc. decreased from 6.83 to 6.58 over the three-month period, causing an increase in liquidity from trading in the second percentile to the first percentile.

BorgWarner Incorporated (CONSUMER GOODS/Automobiles & Parts)

Credit spreads have tightened over the last three months, with the five-year point tightening from 97 bps to 83 bps, a decrease of -14%. The liquidity score on BorgWarner Incorporated decreased from 7.78 to 7.5 over the three-month period, causing an increase in liquidity from trading in the 24th percentile to the 18th percentile.

Computer Sciences Corporation (TECHNOLOGY/Software & Computer Services)

Credit spreads have tightened over the last three months, with the five-year point tightening from 146 bps to 144 bps, a decrease of -1%. The liquidity score on Computer Sciences Corporation increased from 7.24 to 7.34 over the three-month period, causing a decrease in liquidity from trading in the ninth percentile to the 13th percentile.

Expedia, Inc. (CONSUMER SERVICES/Travel & Leisure)

Credit spreads have tightened over the last three months, with the five-year point tightening from 156 bps to 142 bps, a decrease of -9%. The liquidity score on Expedia, Inc. decreased from 7.3 to 7.05 over the three-month period, causing an increase in liquidity from trading in the 10th percentile to the fifth percentile.

Goodyear Tire & Rubber Company (The) (CONSUMER GOODS/Automobiles & Parts)

Credit spreads have tightened over the last three months, with the five-year point tightening from 550 bps to 523 bps, a decrease of -5%. The liquidity score on Goodyear Tire & Rubber Company (The) decreased from 7.53 to 7.16 over the three-month period, causing an increase in liquidity from trading in the 16th percentile to the seventh percentile.

Kraft Food Inc. (CONSUMER GOODS/Food Producers)

Credit spreads have widened over the last three months, with the five-year point widening from 52 bps to 61 bps, an increase of 17%. The liquidity score on Kraft Food Inc. decreased from 7.92 to 7.79 over the three-month period, causing a decrease in liquidity from trading in the 28th percentile to the 29th percentile.

MetLife, Inc. (FINANCIALS/Life Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 174 bps to 128 bps, a decrease of -26%. The liquidity score on MetLife, Inc. increased from 7.04 to 7.08 over the three-month period, causing a decrease in liquidity from trading in the fifth percentile to the sixth percentile.

Omnicom Group Inc. (CONSUMER SERVICES/Media)

Credit spreads have widened over the last three months, with the five-year point widening from 61 bps to 67 bps, an increase of 11%. The liquidity score on Omnicom Group Inc. increased from 7.58 to 7.65 over the three-month period, causing a decrease in liquidity from trading in the 18th percentile to the 24th percentile.

Prudential Financial Inc. (FINANCIALS/Life Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 181 bps to 128 bps, a decrease of -29%. The liquidity score on Prudential Financial Inc. increased from 7.22 to 7.27 over the three-month period, causing a decrease in liquidity from trading in the eighth percentile to the 10th percentile.

Sprint Nextel Corporation (TELECOMMUNICATIONS/Mobile Telecommunications)

Credit spreads have widened over the last three months, with the five-year point widening from 317 bps to 357 bps, an increase of 13%. The liquidity score on Sprint Nextel Corporation decreased from 7.04 to 6.99 over the three-month period, causing an increase in liquidity from trading in the fifth percentile to the fourth percentile.

Sara Lee Corporation (CONSUMER GOODS/Food Producers)

Credit spreads have widened over the last three months, with the five-year point widening from 133 bps to 135 bps, an increase of 1%. The liquidity score on Sara Lee Corporation increased from 7.51 to 7.56 over the three-month period, causing a decrease in liquidity from trading in the 16th percentile to the 20th percentile.

Temple-Inland Inc. (INDUSTRIALS/General Industrials)

Credit spreads have tightened over the last three months, with the five-year point tightening from 228 bps to 210 bps, a decrease of -8%. The liquidity score on Temple-Inland Inc. increased from 7.16 to 7.34 over the three-month period, causing a decrease in liquidity from trading in the seventh percentile to the 12th percentile.

Pitney Bowes Inc. (TECHNOLOGY/Technology Hardware & Equipment)

Credit spreads have tightened over the last three months, with the five-year point tightening from 151 bps to 145 bps, a decrease of -4%. The liquidity score on Pitney Bowes Inc. decreased from 7.86 to 7.72 over the three-month period. The regional percentile ranking stayed the same

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Fitch Solutions, a division of the Fitch Group, focuses on the development of fixed-income products and services, bringing to market a wide range of data, analytical tools and related services. The division is also the distribution channel for Fitch Ratings content.

The Fitch Group also includes Fitch Ratings and Algorithmics, and is a majority-owned subsidiary of Fimalac, S.A. For additional information, please visit 'www.fitchsolutions.com'; 'www.fitchratings.com'; 'www.algorithmics.com'; and 'www.fimalac.com'.

Fitch SolutionsJonathan Di Giambattista, +1-212-908-0273
Managing Director
Fitch Inc., 1 State Street Plaza, New York, NY 10004
orDiana Allmendinger, +1-212-908-0848
Director
or
Media Relations:Peter Fitzpatrick, +44 20 3530 1103, London
Email: [email protected]Sandro Scenga, +1-212-908-0278, New York
Email: [email protected]

Source: Fitch Solutions