European CDS tightens

European corporate credit default swap spreads were tighter on Friday, helped by a buoyant mood across equity markets. Sovereign risk was in the spotlight again after Moody's Investors Service cut its rating on Greece's debt to A2 from A1, a move which had little impact on corporate credit spreads.
"In the run up to the year-end, a lot of people had been nervous about the final weeks of the year and there was some hedging of cash with CDS, so, unwinding of these hedges now could be helping to drive it tighter" said Michael Hampden-Turner, credit analyst at Citi.
By 1127 GMT, the investment-grade Markit iTraxx Europe index was at 77 basis points, according to data from Markit, 2.25 basis points tighter versus late on Monday, according to data from BGC Partners. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 450 basis points, 22 basis points tighter.