Fitch: Cooper Tire & Rubber CDS Spreads Signal Credit Woes

  Fitch: Cooper Tire & Rubber CDS Spreads Signal Credit Woes

Business Wire

NEW YORK -- June 20, 2013

Widening credit default swap (CDS) spreads on Cooper Tire & Rubber are
signaling growing market concerns over the company's credit health, according
to Fitch Solutions. Five-year CDS spreads on Cooper have widened 35% since
June 12 as the market reacted to news that India's Apollo Tyres Ltd. will buy
the U.S. tire manufacturer for $2.5 billion.

Cooper CDS spreads had been widening consistently for a month leading up to
the announcement. The price of credit protection on Cooper is now aligned with
'B-' rating levels, just one notch below its CDS implied rating or historical
trading pattern. Credit markets are clearly worried about the additional debt
burden that will be placed on Cooper as a result of the planned buyout.

CDS liquidity signaled credit concerns as early as September of last year, a
month before rumors of the potential buyout surfaced. According to Fitch
Solutions' CDS Liquidity Score Model, CDS on Cooper went from trading in the
14th global percentile on Sept. 3, 2012 to trading in the second percentile
(or with more liquidity than 98% of single-name CDS) on Sept. 20, 2012.
Despite some variance in liquidity since that time, CDS referencing Cooper
have continued to trade within the fifth global percentile thus far in 2013,
signaling ongoing uncertainty surrounding the company's credit prospects.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit
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