European credit derivatives indices widened on Wednesday as investors, many returning from an extended Easter break, reacted to the jump in Greece's risk premium the previous day, a trader said. French cement company Lafarge took advantage of a post-Easter new issues cash bond issues, most of them from banks, with a 500 million euro ($668.2 million) eight-year offering.
By 1148 GMT, the investment-grade Markit iTraxx Europe index was at 78.25 basis points, according to data from Markit. That is 1.75 basis points wider versus late on Tuesday, according to data from BGC Partners. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 422.25 basis points, 5.25 basis points wider.
Doubts about Greece's capacity to resolve its debt crisis surfaced on Tuesday due to reports it was seeking to amend a safety net from the European Union and International Monetary Fund, pushing the premium on 10-year government bonds to a high. Greek officials later denied they intended to renegotiate the deal.
Five-year credit default swaps on the Hellenic Republic were little changed to slightly tighter on Wednesday after widening by 46 basis points to around 390 basis points on Tuesday, according to Markit. In the cash bond market, final guidance on the Lafarge bond came at the narrow end of its range to 205 basis points over mid-swaps, which analysts at CreditSights characterised as "somewhat tight". That compared with five-year CDS on Lafarge at around 197 bps at the close on Tuesday, according to Markit data.
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