NRUC

The Fed may have stopped printing money, but that does not prevent Fukushima from printing radiation, and a flooded Fort Calhoun to print notices of "all's well" even as a 10 mile evacuation zone has been established. Per Ex-SKF, quoting the Sankei Shinbun: "A citizens' group in Fukushima Prefecture "Fukushima Network to Protect Children from Radiation" tested the urine samples from 10 children in Fukushima City, age 6 to 16, and announced on June 30 that a small amount of radioactive materials was detected from all samples. The highest amount of cesium-134 was from an 8-year-old girl, at 1.13 becquerels per liter. The highest amount of cesium-137 was from a 7-year-old boy, at 1.30 becquerels per liter. The samples were taken in late May, and sent to the French laboratory ACRO (Association pour le Contrôle de la Radioactivité dans l’Ouest) to testing for radiation. ACRO has experience in surveying the radiation exposure in children after the Chernobyl accident. ACRO's president David Boilley said in the press conference, "There is a very high possibility that children in and around Fukushima City have been exposed to internal radiation. Prior to the [Fukushima] accident, these numbers would have been zero." Nothing to see here. Just as there is nothing see in Nebraska, where the NRUC said there is nothing to worry about... despite the imposition of a 10 mile evacuation radius. As a reminder Fukushima has a roughly 18 mile evacuation radius zone.

Spreads widened dramatically today, closing at their wides, as overnight weakness from GOOG's miss combined with further contagious stress in European sovereigns and financials was slammed down following the SEC's charges against GS. IG widened the most close-to-close in over two months and HY underperformed as derisking, which started overnight, was clearly in play and perhaps the initial gappy nature suggest that this rally remains very fragile.

Today's top CDS movers wider were almost all health insurers, likely still reeling from the potential adverse fallout of any new health bill. Additionally, Sempra Energy was the day's biggest mover at +16 bps. In the tightening camp, VNO and CEG lead the pack, with old Zero Hedge favorite NRUC making the top five list as well.

All risky assets closed at their lows as the disappointing macro numbers today (following on from yesterday's green shoot withering headlines) were not helped later in the day by the weak auto sales numbers (which were in general in line to slight worse than expected but dramatically down from CfC summer-time fun and games). The unusual dollar questioning of Bernanke pushed some volatility into DXY (and ramping in EUR/JPY was unable to budge it much) as his 'other-than-fiscal issues' comment (which reminds us of Monty Python discussing the Romans) slammed DXY and then saw a run to quality as DXY closed at its highest since 09/08.

When Zero Hedge first discussed the plethora of problems at National Rural Utilities Cooperative Finance Corporation (aka NRUC) over 4 months ago, two things happened very quickly: the company's CDS blew up from 100 bps to over 250 bps overnight, and the company promptly issued a derogatory press release ridiculing everyone and everything associated with Zero Hedge (they were the first but certainly not the last). Immediately thereafter, likely under the advice of counsel, NRUC promptly retracted the press release but not before The Business Insider managed to keep a record for posterity.

In retrospect this may have been a smart move after Fitch just put the company on downgrade review for very much the same reasons I was concerned about in March.

I thought the financial cooperative had managed to sweep its troubles under the rug (at least temporarily) after NRUC announced its results last week with no major surprises... Maybe I was early... And this is despite the company's rushed attempt to complete the credit bid for ICC.

The major outlier in IG CDS over the past two days has been a name that Zero Hedge frequent readers are all too familiar with. The 5 year CDS of National Rural Utilities Cooperative Finance Corp has been on a 100 bps widening trajectory with no available news. Several traders have voiced their concern over the contents of the upcoming earnings call, which the company has postponed from its original date this week, to some time next week.

NRUC, whose $1.5 billion credit facility matured today, managed to roll the facility into a new $1 billion 364-day facility expiring on March 12, 2010, via a consortium of 12 banks. The changing bank landscape is obvious when one considers that Bank of Nova Scotia and RBS are co-lead arrangers and joint book runners instead of traditional go to secured lenders.

Looks like Zero Hedge has at least one reader. After the NRUC story was published (and contrary to some amusing opinions, Zero Hedge is not a hedge fund nor is talking its book... we would love that to be the case seeing the reaction in NRUC CDS plus the name Zero Hedged Capital sounds oddly attractive), first Goldman picked up on it, now Gimme Creddit seems to be chiming in.

Every now and then we go through the list of IG11 companies looking for something that just looks out of place. This time around our attention was caught by a financial company, whose CDS was trading at a level which we initially thought had to be a mistake.

Every now and then we go through the list of IG11 companies looking for something that just looks out of place. This time around our attention was caught by a financial company, whose CDS was trading at a level which we initially thought had to be a mistake.