Credit default swap spreads were little changed on Thursday, after tightening earlier in the day partly in response to an offer by UK bank Lloyds to buy back subordinated debt. Royal Bank of Scotland came out with a similar offer to exchange subordinated debt for senior unsecured debt. Traders said there was little initial reaction in the CDS market to the banks actions.
By 1614 GMT, the investment-grade Markit iTraxx Europe index was at 160.50 basis points, according to data from Markit, 0.50 basis points tighter versus late on Wednesday. The Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 901 basis points, unchanged from Wednesday.
The Markit iTraxx five-year senior financials index was at about 162 basis points, unchanged on the day, and the subordinated index was at about 287.5 basis points, about 7 basis points tighter, traders said.
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