European credit spreads widened on Wednesday as equities remained volatile, although Crossover member Peugeot managed to raise 750 million euros ($1 billion) in the bond market despite the more nervous mood. By 1447 GMT, the investment-grade Markit iTraxx Europe index was at 122.5 basis points, according to data from Markit, 3.5 basis points wider versus late on Tuesday.
The Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 777 basis points, 17 basis points wider. Earnings news is expected to dominate headlines over the next few weeks, with aluminium maker Alcoa reporting later on Wednesday. Peugeot, rated at the lowest notch of investment-grade by both Moody's Investors Service and Standard & Poor's and "junk" by Fitch Ratings, sold a five-year bond, yielding 8.625 percent.
Elsewhere in the high-yield sector, German cement maker Heidelbergcement posted an operating profit in the first five months of the year and said it saw signs of improvement in some of its markets. Its shares rose more than 5 percent, although its five-year credit default swaps were little changed at about 18.5 percent upfront, a trader said.
Meanwhile, five-year CDS on German chipmaker Infineon moved slightly wider in a generally weaker market to around 59 percent upfront, the trader added, even though its shares soared more than 20 percent. Infineon said it was selling its wireline communications unit for 250 million euros, giving the company badly needed cash. Analysts at CreditSights said the overall margin of error and cash cushion remains very thin for the company.
"In particular, the cash position remains extremely sensitive to the revenue recovery," said CreditSights. "We expect the company to continue to seek debt issuance, asset sales and government help," the research firm added, saying that the success of the company's recent convertible bond issue should help those efforts.
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