European corporate credit default swap spreads were wider on Wednesday, partly in response to falls on Wall Street and also a credit rating downgrade of Ireland by Standard & Poor's. S&P cut Ireland's long-term rating to AA- from AA with a negative outlook.
The agency said the downgrade reflected a significant increase in the Irish government's costs of supporting its banking sector. "Not a huge surprise as Ireland was already on negative outlook at S&P," ING strategists said in a note. "The more sinister aspect to the move is that S&P have maintained a negative outlook. This contrasts with Fitch which has Ireland at AA- with a stable outlook. Moody's also has a stable outlook and on a better rating of Aa2."
By 0703 GMT, the investment-grade Markit iTraxx Europe index was at 115.75 basis points, according to data from Markit. That is 1 basis point 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 514.65 basis points, 2.65 basis points wider.
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