European corporate CDS indexes were wider on Friday, guided by weakness in sovereign issues on concern over Greece's financial woes. By 1110 GMT, the investment-grade Markit iTraxx Europe index was at 72.5 basis points, according to data from Markit, 2 basis points wider versus late Thursday, according to data from BGC Partners.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 406 basis points, 3 basis points wider. "Sov CDS and the SovX is the driver," said a London-based corporate CDS index trader. The issue of sovereign risk, as highlighted by concern over the state of Greece's public debt, meant the iTraxx SovX index of western European sovereign CDS traded wider than the Main index for the first time on Thursday.
"A key driver for this was the significant underperformance of peripheral sovereigns, which are over-represented in SovX compared with Main," said Barclays Capital, in a note. Early Friday, Greek sovereign debt was priced at 339,300 euros per 10 million euros of exposure, just off Thursday's record high of 345,000 euros, according to five-year credit default swap prices from CMA DataVision.
Looking ahead, corporate CDS traders were expected to focus later on the release of US economic data, including the latest inflation figures, as well as earnings from JP Morgan Chase & Co, which kicks off quarterly results from US banks.
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