iTraxx hits record wide spread level

The investment-grade iTraxx Europe index hit a record wide spread level on Friday, giving up earlier tentative gains, on speculation that a European fund was liquidating a structured credit product. The Markit iTraxx Europe index hit a life intraday high of 95 basis points, a trader said, about four basis points wider on the day.
"There is clearly speculation that there is a big unwinding of structured positions," said Jim Reid, a credit strategist at Deutsche Bank. "Investment grade is underperforming everything else. When that happens, it indicates some kind of structured product unwind because they are more concentrated on investment grade than high yield."
Analysts said the product was likely to be a collateralised debt obligation (CDO). The iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 527 basis points, according to Markit data, about 2 basis points wider versus late on Thursday.