Fitch Solutions: Widening Disney CDS Bucks Overall Media Trend

NEW YORK--(BUSINESS WIRE)-- Markets are signaling concern over Walt Disney Company's credit condition, as their recent CDS and liquidity performance of late will attest, according to Fitch Solutions in its latest update on Global CDS Spreads/Liquidity Scores for companies scheduled to come out with earnings announcements this week.

Disney's regional liquidity has increased seven percentiles, while its CDS spreads have widened 13% over the last three months. Disney has been underperforming the overall North America media sector, for which CDS has tightened 7% during the same period. In contrast, CDS on New York Times Co. has tightened more than 20% over the last three months, indicating an improved credit outlook after reaching distressed levels a year ago.

"The recession's effects on discretionary spending for entertainment remain lasting, albeit to varying degrees," said Author and Managing Director Jonathan Di Giambattista. "While the CDS market indicates that Disney is the strongest media company, the increased liquidity signals new uncertainty in the face of slumping box office, ad sales and theme park attendance."

Six North American insurance companies are also reporting this week, with some big names continuing to underperform. Allstate Corporation's (scheduled to report on Wednesday) saw CDS spreads tightening 3.7%, compared to 6.3% firming observed for the industry. Liquidity for Allstate moved into the fourth regional percentile, from the 14th. 'The market is increasingly concerned over Allstate's sizeable commercial real estate market exposure, while the potential outcome of President Obama's proposed tax levy is also creating some uncertainty' said Di Giambattista.

Credit markets are signaling increasing uncertainty for Progress Energy Inc, scheduled to report earnings on Thursday. Over the past quarter, the North American oil & gas industry experienced 14% CDS tightening. In contrast, CDS on Progress Energy widened 30% as liquidity shot up 10 regional percentiles, moving into the 13th percentile. EnCana Corporation, also reporting Thursday, has underperformed the industry as well, tightening less than 10%, while liquidity moved up 24 regional percentiles.

Companies scheduled to report earnings this week include the following:

North America:

Allstate Corporation (The) (FINANCIALS/Nonlife Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 73 bps to 70 bps, a decrease of -4%. The liquidity score on Allstate Corporation (The) decreased from 7.85 to 6.59 over the three-month period, causing an increase in liquidity from trading in the 14th percentile to the 4th percentile.

Walt Disney Company (The) (CONSUMER SERVICES/Media)

Credit spreads have widened over the last three months, with the five-year point widening from 47 bps to 53 bps, an increase of 13%. The liquidity score on Walt Disney Company (The) decreased from 8.67 to 7.74 over the three-month period, causing an increase in liquidity from trading in the 36th percentile to the 29th percentile.

Duke Energy Carolinas, LLC (UTILITIES/Gas, Water & Multiutilities)

Credit spreads have widened over the last three months, with the five-year point widening from 48 bps to 52 bps, an increase of 8%. The liquidity score on Duke Energy Carolinas, LLC decreased from 8.37 to 7.85 over the three-month period, causing a decrease in liquidity from trading in the 27th percentile to the 32nd percentile.

EnCana Corporation (OIL & GAS/Oil & Gas Producers)

Credit spreads have tightened over the last three months, with the five-year point tightening from 72 bps to 65 bps, a decrease of -10%. The liquidity score on EnCana Corporation decreased from 9.21 to 7.64 over the three-month period, causing an increase in liquidity from trading in the 50th percentile to the 26th percentile.

EOG Resources, Inc. (OIL & GAS/Oil & Gas Producers)

Credit spreads have widened over the last three months, with the five-year point widening from 44 bps to 50 bps, an increase of 14%. The liquidity score on EOG Resources, Inc. increased from 9.63 to 9.72 over the three-month period, causing a decrease in liquidity from trading in the 60th percentile to the 68th percentile.

Hartford Financial Services Group (FINANCIALS/Nonlife Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 256 bps to 219 bps, a decrease of -14%. The liquidity score on Hartford Financial Services Group decreased from 7.61 to 7.35 over the three-month period, causing a decrease in liquidity from trading in the 9th percentile to the 19th percentile.

Lincoln National Corporation (FINANCIALS/Life Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 256 bps to 215 bps, a decrease of -16%. The liquidity score on Lincoln National Corporation decreased from 7.43 to 6.97 over the three-month period, causing a decrease in liquidity from trading in the 6th percentile to the 10th percentile.

Marsh & McLennan Companies, Inc. (FINANCIALS/Nonlife Insurance)

Credit spreads have widened over the last three months, with the five-year point widening from 56 bps to 83 bps, an increase of 47%. The liquidity score on Marsh & McLennan Companies, Inc. decreased from 8.41 to 7.46 over the three-month period, causing an increase in liquidity from trading in the 28th percentile to the 21st percentile.

New York Times Company (The) (CONSUMER SERVICES/Media)

Credit spreads have tightened over the last three months, with the five-year point tightening from 307 bps to 244 bps, a decrease of -20%. The liquidity score on New York Times Company (The) decreased from 7.92 to 7.04 over the three-month period, causing an increase in liquidity from trading in the 16th percentile to the 12th percentile.

Omnicom Group Inc. (CONSUMER SERVICES/Media)

Credit spreads have tightened over the last three months, with the five-year point tightening from 77 bps to 73 bps, a decrease of -5%. The liquidity score on Omnicom Group Inc. decreased from 7.84 to 7.18 over the three-month period, causing a decrease in liquidity from trading in the 13th percentile to the 15th percentile.

Progress Energy, Inc. (OIL & GAS/Oil & Gas Producers)

Credit spreads have widened over the last three months, with the five-year point widening from 59 bps to 77 bps, an increase of 30%. The liquidity score on Progress Energy, Inc. decreased from 8.25 to 7.1 over the three-month period, causing an increase in liquidity from trading in the 23rd percentile to the 13th percentile.

Prudential Financial Inc. (FINANCIALS/Life Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 234 bps to 199 bps, a decrease of -15%. The liquidity score on Prudential Financial Inc. decreased from 7.52 to 6.88 over the three-month period, causing a decrease in liquidity from trading in the 7th percentile to the 8th percentile.

Viacom Inc (CONSUMER SERVICES/Media)

Credit spreads have tightened over the last three months, with the five-year point tightening from 85 bps to 85 bps, a decrease of 0%. The liquidity score on Viacom Inc decreased from 8.67 to 8.35 over the three-month period, causing a decrease in liquidity from trading in the 36th percentile to the 45th percentile.

XL Capital Ltd (FINANCIALS/Nonlife Insurance)

Credit spreads have tightened over the last three months, with the five-year point tightening from 145 bps to 115 bps, a decrease of -20%. The liquidity score on XL Capital Ltd decreased from 8.06 to 7.56 over the three-month period, causing a decrease in liquidity from trading in the 18th percentile to the 24th percentile.

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 Solutions
Jonathan Di Giambattista, +1-212-908-0273 (New York)
Diana Allmendinger, +1-212-908-9192 (New York)
Media Relations
Peter Fitzpatrick, + 44 (0)20 7417 4364 (London)
[email protected]
Sandro Scenga, +1-212-908-0278 (New York)
[email protected]

Source: Fitch Solutions