Fitch Solutions: CDS Widens, Liquidity Rises for Constellation on Earnings

NEW YORK & LONDON--(Business Wire)--
Reported oversupply for the U.S. parent of Australia's second largest wine
company is resulting in wider CDS and a substantially higher liquidity despite
bullish sector trends, according to Fitch Solutions in its latest update on
Global CDS Spreads/Liquidity Scores for companies schedule to come out with
earnings announcements in the coming week.

"Constellation Brands was forced to report a material weakness in its internal
controls due to improper reporting of its Australian inventory, which may
explain the recent widening of its CDS spreads," said Author Thomas Aubrey, a
Managing Director for Fitch Solutions. "Constellation's higher liquidity, along
with where it is trading of late, also bears watching."

In general, the liquidity of a credit derivative asset increases when it is
showing signs of financial stress in combination with a significant amount of
debt outstanding and/or changes in its capital structure, including new
issuance. The liquidity scores of assets have historically traded between four
at the most liquid end, through to 29 at the least liquid end.

North America:

Constellation Brands Inc.

Credit spreads have widened slightly over the last three months with the
five-year point widening from 344 basis points (bps) to 384bps, an increase of
12%. In conjunction with this widening of spreads, liquidity on Constellation
Brands Inc. increased significantly from trading in the 32nd percentile to the
17th percentile. Its liquidity increased from 8.68 to 7.78 over the three-month
period. The U.S. parent of Australia's second largest wine company posted its
second successive loss in its most recent annual report.

Nalco Company

Credit spreads have reduced considerably over the last three months with the
five-year point narrowing from 694bps to 569bps, a fall of 18% which is in line
with the respective sector. Despite this narrowing of spreads, liquidity on
Nalco Company increased slightly from trading in the 23rd percentile to the 26th
percentile. Its liquidity also increased slightly from 8.33 to 8.23 over the
three-month period, highlighting increased uncertainty within the industrial
sector.

General Mills, Inc.

Credit spreads have reduced considerably over the last three months with the
five-year point narrowing from 80bps to 50bps, a fall of 38% which is in line
with the respective sector. Despite this narrowing of spreads, liquidity on
General Mills Inc. increased from trading in the 48th percentile to the 35th
percentile. Its liquidity increased to some extent from 9.30 to 8.56 over the
three-month period, highlighting increased uncertainty within the food producers
sector.

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. Fitch Solutions' product offerings include
Fitch Ratings' research delivery, risk and performance analytics, surveillance
tools, structured finance workflow solutions, and pricing and valuation
services. The division's service offerings include Fitch Training, a specialist
training firm for financial professionals, and Advisory Services, which provide
customized consulting to help clients better, understand their risk.

The Fitch Group also includes Fitch Ratings, a global rating agency dedicated to
providing the world's credit markets with independent and prospective credit
opinions, and Algorithmics, a leader in enterprise risk management solutions.
The Fitch Group is a majority-owned subsidiary of Fimalac, S.A., headquartered
in Paris, France. For additional information, please visit www.fitchratings.com;
www.algorithmics.com; and www.fimalac.com.

Fitch Ratings
Author Contact
Thomas Aubrey, +44 (0) 207 682 7226 (London)
Jonathan Di Giambattista, +1-212-908-0273 (New York)
Media Relations
Peter Fitzpatrick, + 44 (0)20 7417 4364 (London)
peter.fitzpatrick@fitchratings.com
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

Copyright Business Wire 2009