European credit spreads were slightly tighter late on Thursday and the market saw further new bond issues as companies remain keen to secure funding before the year-end. By 1619 GMT, the investment-grade Markit iTraxx Europe index was at 162.75 basis points, according to data from Markit, 0.25 basis points tighter versus late on Wednesday.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 869.75 basis points, 2.25 basis points tighter. Among new deals on Thursday, British mobile phone group Vodafone raised 1 billion euros ($1.3 billion) through a five-year deal which priced at mid-swaps plus 350 basis points, while oil major BP sold a 500 million euro 2-year bond at mid-swaps plus 115 basis points via a finance arm.
Credit default swaps on Vodafone widened about 6 basis points to 206 basis points. Centrica, the owner of British Gas, was one of the worst performers in single name CDS, with its debt protection costs jumping by about 20 basis points to 135 basis points, according to Markit.
The move was driven by the company's newly-issued five-year 750 million euro bond, which was priced at a high premium over its CDS at mid-swaps plus 380 basis points. The bond contained a coupon step-up clause, linked to the company's acquisition of a 25 percent stake in British Energy, and which is triggered in the event of a downgrade, an official at one of the banks managing the sale said.
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