When Swedish-Swiss engineering group ABB broke even in the first quarter – and with CEO Juergen Dormann saying he expects the company to be back in the black this year – it indicated that the company is reaping the benefits of its ambitious restructuring plan at the end of 2003.
ABB’s more positive outlook is reflected in its credit default swap spreads. In November last year, when the three-part capital strengthening plan was carried out (consisting of a $2.5bn rights issue, a $1bn loan from 12 relationship banks and a e650m bond issue), its CDSs were trading at around 275 basis points over Libor; now, according Credit Market Analysis (CMA) they have tightened to 197.5. CMA data reveals that ABB still trades much wider than its sector competitors, however.
