CDS: Walt Disney, ILFC and AIG

After market close on Tuesday, The Walt Disney Co reports Q411 results. EPS is forecast at 71 cents on revenue of US$11.21bn for the fiscal first quarter through December. Estimates expect the period will see weakness in ESPN and ABC ratings which could weigh on ad growth.

DIS is also expected to remain focused on shareholder returns after it recently upped the dividend by 50% and will actively buy back shares. According to a recent Barclays note, DIS shares are up 25% over the past three months versus +11% for the S&P 500.

CDS has narrowed 32bp to 23 in semi-fluid volumes. The sharp narrowing is offset since DIS was lifted to –39 in London flow. The name was thereafter knocked back to its usual 20–25 range.

ILFC loan

In a press release, ILFC, wholly-owned subsidiary of AIG said it would raise a new senior secured term loan of US$900m. Proceeds of the new term loan will repay a portion of its outstanding debt and related interest expense as well as general corporate purposes.

The senior secured term loan will be secured primarily by a first priority perfected lien on the equity of some of the company’s subsidiaries that directly / indirectly own a pool of aircraft and related leases.

Spreads are 7bp tighter at 467 while AIG is unchanged at 262.

Fitch on AIG

Fitch affirmed American International Group’s BBB senior unsecured and its A insurer financial strength rating late on Friday. The IDR was affirmed at BBB while the outlook was revised to positive from stable. Fitch upgraded various AIG subordinated debt to BB from BB–.

The outlook revision on the IDR and upgrade of some sub debt reflects improvements in liquidity and its financial profile over the last year to year and a half as it deleveraged.

Fitch says it considers the credit profile of AIG “absent consideration of the US Treasury majority ownership”.

CDS is mostly unchanged at 262.

By Melissa Mott