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Corus credit, default swaps decline to 2-year low

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Bloomberg Mumbai
Last Updated : Feb 05 2013 | 12:50 AM IST
Credit-default swaps based on Corus Group Plc's bonds fell to a two-year low this week after Tata Steel delayed a decision on refinancing debt of the UK steelmaker it acquired last year.
 
Contracts on ¤10 million ($13 million) of London-based Corus's debt fell ¤31,000 to ¤115,000 this week, according to data compiled by Bloomberg.
 
Tata Steel, the world's sixth-largest maker of the metal, said April 17 it has yet to decide on whether to redeem Corus's $1.9 billion of outstanding bonds. A decision by the Tatas to buy back Corus's bonds would make contracts protecting against non-payment almost worthless.
 
Similar concerns that EMI Group will repay its bonds by selling securities backed by revenue from its music publishing business caused the cost of credit-default swaps on the record company to slump this week."The market has been speculating that the reference obligations of Corus will be bought back," said Christophe Boulanger, a credit analyst at Dresdner Kleinwort in London.
 
"If this turns out to be the case, those who will lose will be those who are buying protection." J Sainsbury, the UK third-biggest food retailer, sent credit-default swaps tumbling last year by securitizing property assets to pay off debt.Credit-default swaps are financial instruments that are used to speculate on a company's ability to repay debt.

 
 

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First Published: Apr 22 2007 | 12:00 AM IST

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