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RPT-Fitch Solutions: Telekom Austria's CDS widens 17% on Spectrum acquisition
October 28, 2013 / 9:15 AM / 4 years ago

RPT-Fitch Solutions: Telekom Austria's CDS widens 17% on Spectrum acquisition

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Oct 28 (Reuters) - (The following statement was released by the rating agency)

The CDS market is signaling concern over Telekom Austria AG, whose spreads have widened 17% over the past month according to the latest case study from Fitch Solutions.

“This widening is likely due to Telekom Austria’s recent debt-financed 1 billion euro acquisition of new telecoms spectrum, which will allow it to provide higher speed and broader coverage to its customers,” said Diana Allmendinger, Director, Fitch Solutions.

This spread underperformance contrasts our European Telecom CDS Index, which moved 9% tighter during the same time period.

“After historically trading in the ‘BBB’ space, as indicated by its CDS Implied Rating, CDS on Telekom Austria are now pricing in line with ‘BBB-’ levels,” Allmendinger added.

CDS liquidity for the company has also increased, moving from the 22nd regional percentile to the 14th, signaling increased CDS market uncertainty over future pricing levels.

Fitch Solutions case studies build in data from its CDS pricing tools and CDS-implied ratings (CDS IRs), both of which are risk indicators 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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