Poor auto sales and Fiat downgrade drives some spreads wider

The downgrade of debt issued by troubled Italian auto manufacturer Fiat to junk status sent the cost of its credit protection wider by about 125 basis points to 875/975bp. And poor US February auto sales released mid-week also prompted the widening on credit default swaps on US automaker Ford.

Fitch’s downgrade of Fiat to BB+/negative on Tuesday was swiftly followed by S&P on Wednesday. Immediately following the Fitch downgrade, five-year credit default protection for Fiat widened by 75bp to 800/850bp, widening another 25bp on S&P’s downgrade. Fiat's spreads continued to widen throughout the week due to investors' concerns over the company's capital position. Its credit default spreads closed today at 850/950bp.

Traders said there were also concerns about the exposures of Italian

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