LONDON, Mar 11 (MNI) European credit markets had another very subdued session in terms of secondary market price action, with the new issues market the central focus this week as the slew of new deals continues to hit the market. Spreads in the secondary sector have not been adversely impacted by the supply, with prices only fractionally wider in places, in line with a mildly softer tone in the stock market.

Newsflow remains very thin which should lead to a continuation of the current narrow range in the near term. Xover is currently 5 basis points wider at 414bps, HiVol 2bps wider at 110bps and Europe 1bps wider at 75bps.

EMI CDS spreads widened to their worst levels of the year this morning following the news that the groups chief executive, Elio Leoni-Sceti, resigned after less than two years in the job. EMI announced that Charles Allen, the former chief executive of ITV PLC who is EMI Music's non-executive chairman, will become executive chairman. Leoni-Sceti said in an e-mail to employees,

"My job is now done. the company is operationally on a solid track, contrary to what is reported, the creative momentum is very strong, and I thought it was time for me to move on," he said.

However press reports this morning suggest that Leoni-Sceti and Guy Hands were at odds about how to rescue the firm, which reportedly is in danger of defaulting on huge outstanding loans to Citigroup. Hands has now hired David Fraumann to the board of Maltby Investments, the holding company that owns EMI, so that he can use his financial restructuring skills to negotiate with Citigroup, which is pushing to seize control of EMI if a strategy is not hammered out by June. CDS spreads in the firm have hit 1,207 basis points this morning, 43bps wider.

William Morrison Supermarkets released full-year results this morning, reporting that turnover increased by 6% to Stg15.4 billion versus Stg14.5 billion last year. Operating profit was Stg907 million compared with Stg671 million last year, with PBT increasing to Stg858 million versus Stg655 million last year. PBT included an exceptional credit of Stg91 million arising from steps taken to strengthen the company's pension schemes. Net profit for the year was Stg598 million compared with Stg460 million last year. The Board is recommending a final dividend of 7.1p per share, to bring the total for the year to 8.2p, an increase of 41%, which brings dividend cover in line with its policy of 2.5x. Cash generation was strong, with cash from operations of Stg1.0 billion, up Stg40 million on the previous year.

Capital expenditure increased to Stg906 million from Stg678 million, as expected, following the development of a new South East regional distribution centre. Gearing was 19%, and at the year-end the Group had undrawn committed bank facilities of Stg650 million. The Group's credit rating was upgraded by Moody's to A3. Looking forward, the company expects the economic environment to remain challenging, disposable incomes to be under pressure and value to be a high priority for consumers.

As a result the company will continue to offer high quality fresh food at value prices. For the longer term, the company will utilise its balance sheet strength to invest for growth, with new space, new manufacturing capability and new systems a priority in the year ahead. Shares in Morrison are currently down 4.1p trading at the 300.1p level, with CDS spreads unchanged at the 55 bps level.

BMW reported upbeat earnings this morning, promoting shares to rally over 3%. The group announced net income of E210 million compared to E330 million last year but proposed to keep its dividend unchanged. The market was looking for a net income figure closer to E165 million. Revenues fell in line with expectations, down 4.7% to E50.7 billion. BMW said that by keeping the dividend unchanged the firm was demonstrating its confidence in its own operating strength. CDS is 1bps tighter at 88bps, against a backdrop of slighty wider CDS prices in the broader autos and cyclicals sector.

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