Mexico
Mexico’s sovereign credit default swaps jumped to top spot on the most active list for the week ended February 25, 2011. The almost $4 billion in CDS that traded was the highest since September 17, 2010. The 258 contracts that traded also represented a new high for this year, and the highest since 587 contracts traded that week in September.
Mexico’s markets have more or less been influenced by factors in its northern neighbor. Mexican CDS prices are around the 115 bps area while Mexican government bond spreads over US Treasuries are are around 133 bps.
French Banks
Another noticeable pattern was the appearance of 3 of the top 4 French banks: BNP Paribas, Societe Generale and Credit Agricole (Natixis is the other one) among the most actives. The majors have all finished reporting third-quarter earnings and despite some positive share price performance for the year-to-date, worries linger about the extent of potential losses at banks – particularly in France and Germany with one analyst, Barry Eichengreen, recently saying that “I’d put the costs for recapitalizing the German and French banks at 3 percent of Franco-German gross domestic product”
By some accounts, it appears there were record amounts of trading in certain banks. BNP Paribas saw over $1 billion in gross notional value traded for the first time surpassing its previous high of just under that mark in November. Societe Generale also tried but was unable to surpass the billion-dollar mark falling about $30 million short but still surpassed its previous record of almost $900 million from last September. Credit Agricole was the major bank that fell short of its previous record $883 million in trades from last November. Credit Agricole, however, has been in the most active list for sometime now (3 straight weeks) and actually saw a slight decline in weekly activity from $790 million the previous week to $735 million.
Even Natixis, which is not a very active or liquid name in the CDS markets saw a noticeable jump in activity with almost $27 million in trades during the week – compared to zero trades the previous week.
Other active corporates include MBIA Insurance, Sprint Nextel, ENI, Bank of America, Lafarge, Ineos Group Holdings, Barclays Bank, Goldman Sachs, Banco Santander and Morgan Stanley.