European credit index spreads widened late Monday morning in thin sovereign-focused trade, partly as a result of a US holiday, while primary issuance remained scant. By 1140 GMT, the investment-grade Markit iTraxx Europe index was at 92.25 basis points, according to data from Markit, 2.25 basis points wider versus late on Friday, according to data from BGC Partners.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 502 basis points, 8 basis points wider. Trade remained thin, said traders, with the US President's Day holiday, as well as Chinese New Year and a UK school holiday, stymieing activity. "It may not be the most liquid week and thus could be volatile if we get some important news," said analysts at Deutsche Bank.
Credit markets continued to focus on the form of support to be offered by eurozone member states to Greece, but sentiment also took a hit from the widening in Dubai debt spreads on concern about the restructuring of Dubai World. European Union finance ministers are due to meet to discuss Greece's budget woes on Monday and Tuesday, although a source told Reuters last week it was not expected to result in an aid package.
In the primary market, new issues remained scant, although a syndicate official at a European bank said the market was "feeling a little better" and he expected more deals to emerge this week.
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