Jan 15 (The following statement was released by the rating agency)
Credit default swaps (CDS) on Sears Roebuck
Acceptance Corporation (Sears) have widened 39% over the past month, according
to Fitch Solutions.
Sears CDS significantly underperformed the 9% CDS tightening for the broader
North America Retail CDS Index over the same time period. Additionally, the cost
of Sears credit protection has climbed to levels not seen in nearly two years.
'Worsening sentiment for Sears is likely attributed to disappointing holiday
sales and a lowered forecast for the fourth quarter,' said Director Diana
Meanwhile, CDS liquidity for Sears is now trading in the second global
percentile. 'After pricing consistently tight relative to JC Penney during the
latter half of last year, CDS on Sears are now trading 90 basis points wider
than credit protection for JCP,' said Allmendinger.
Fitch Solutions case studies build on data from its CDS Pricing Service and
proprietary quantitative models, including CDS Implied Ratings. These credit
risk indicators are designed to provide real-time, market-based views of
creditworthiness. As such, they can and often do reflect more short term market
views on factors such as currencies, seasonal market effects and short-term
technical influences. This is in contrast to Fitch Ratings' Issuer Default
Ratings (IDRs), which are based on forward-looking fundamental credit analysis
over an extended period of time.
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