European corporate credit default swap spreads were unchanged to wider late on Thursday, reversing an earlier tightening as investors sought more detail on a European Union deal to help Greece out of its debt crisis. The EU's move to help Greece has helped soothe financial markets but the full details of the aid package are not expected until next week.
"The backdrop is more constructive but there is an ongoing degree of caution in the market," said one financial institutions banker. "We are not back to where we were before." CDS on banks from Portugal and Spain, for example, which had tightened initially in response to the EU's stance on Greece, did not hold all their gains.
Five-year CDS on Portugal's Banco Espirito Santo, for example, which had tightened more than 13 basis points early in the session, later moved to just 4 basis points tighter at about 221 basis points, according to Markit data. By 1653 GMT the investment-grade Markit iTraxx Europe index was at 87.50 basis points, according to data from Markit, 0.50 basis points tighter than late on Wednesday. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 477.75 basis points, 4.75 basis points wider.
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