Boston, MA 06/03/2014 (wallstreetpr) – J.C. Penney Company, Inc. (NYSE:JCP) is outperforming the North America retail CDS Index of Fitch. The company’s five year CDS saw tightening of more than 36% in the past one month. Over this period, the retail CDS index tightened by as less as 4% showing the strength in the company. The better credit default swap spread of JCP is signaling the investor confidence in the company. The company is back on the recovery path. It is also gaining on the front of the cost of credit protection paid on JCP debt. As per the Fitch, it is trading at its lowest level since July 2013.
The significance of the ratings
J.C. Penney Company, Inc. (NYSE:JCP) is consistently taking steps to enhance the growth. However, the CDS liquidity has shown a gain in last few weeks. The gain in CDS liquidity can have a negative impact on the pricing. At one end it suggests the improving market but on the other end it raises concerns related with the high level of pricing uncertainties.
The ratings
Fitch reaffirmed the Issuer Default Ratings of JCP at ‘CCC.’ It maintains a positive outlook for the company. J.C. Penny was working on its liquidity profile from last some time, and the ratings reflect that has successfully managed the liquidity problem.
The start of the new road
J.C. Penney Company, Inc. (NYSE:JCP) should not get overwhelmed by the status of CDS and the latest ratings by the Fitch. There is no doubt that the company has started showing some traction, but the fact is that it is just the start of the recovery. The company still needs to travel a long way for achieving the growth. The company needs to work seriously so that it can reach the level where it has ample liquidity to fund its operations and debt maturities.
