European corporate credit default swap spreads were little changed on Monday, maintaining their steady tone alongside firmer European equities. By 1114 GMT, the investment-grade Markit iTraxx Europe index was at 79.50 basis points, according to data from Markit, 0.25 basis points tighter versus late on Friday, according to data from BGC Partners.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 470 basis points, 4 basis points tighter. Sovereign risk remained a big theme, highlighted by a narrowing in the spread differential between sovereign CDS and corporate CDS. "The iTraxx Main (Europe) index minus SovX (Sovereign CDS index) stands at an all-time low of 10 basis points this morning," Barclays Capital said in a note to investors.
"The influence of weak government fiscal positions is becoming increasingly apparent." "Sovereign concerns will be a recurrent theme throughout 2010," Puneet Sharma, head of European credit strategy at Barclays Capital said. He also noted that the ratio between corporate and sovereign CDS spreads was close to all-time lows.
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