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Citi recommends First Data PIKs for basis trade
Wednesday, July 29, 2009
In its High yield weekly report for last week, Citi points out that First Data Corp remains one of the credits with the biggest basis between cash and credit default swap spreads. But the report says that First Data’s pay-in-kind bonds offer better value for a basis trade than cash-pay bonds. The PIKs have lost ground as the credit as a whole has rallied. Citi recommends buying the 10.55% 2015 PIKs at 65 cents in the dollar and buying six-year protection for 16.5 point up front.
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CFlux secondary
CLO index levels:
| Index | 6 Feb |
|
| CFlux USD AAA | ↑ | 94.9 |
| CFlux USD AA | ↓ | 81.3 |
| CFlux USD A | ↓ | 75.0 |
| CFlux USD BBB | ↑ | 74.8 |
| CFlux USD BB | ↑ |
72.1 |
| CFlux USD EQ | ↑ | 67.6 |
