Tag: Deutsche Post

Corporate bond prices hit rock bottom at the start of August, and have been rising ever since. Analysts say that spreads on European corporate bonds have tightened by 40 to 50 basis points on average in that period, with telecoms and autos spreads between 100 and 200 basis points tighter, depending on company. Industrial credits have seen more modest tightening, of between 10 and 20 basis points. ‘We have had a very good run over the last two weeks or so, in terms of both equity prices and credit spreads,’ said Giles Hudson on the syndicate at Morgan Stanley. ‘But things are now flattening out a bit.’ While there is theoretically still more potential for credit spread tightening, according to analysts, whether prices will continue to rise or not will depend on a number of factors. These include the amount of new corporate bond supply, the uncertain geopolitical situation regarding US and Iraq, and the health of the US economy.

Deutsche Post AG (G.DPW) regularly boasts that 95% of the letters mailed in Germany arrive the next day – a sign of efficiency given the country’s size. But the message Deutsche Post itself sent to investors when it was partially privatized two years ago – that it’s a solid investment in volatile markets – has gone astray. And this has put the spotlight of the need for greater efficiency in its core business. The company, which is also active in the parcel delivery, logistics and financial services markets, was supposed to offer investors the best of the old and new economies. It was argued that the company would enjoy a lucrative guaranteed domestic mail monopoly for several more years while turning itself into a leading international logistics firm. But the sharp economic slowdown and two regulatory blows have altered the outlook, causing the shares to halve in value since they were issued. Now the company is scrambling to cut costs. The question is whether Deutsche Post, still 69% state owned, can find the savings to put the punch back into its initial sales pitch.