European CDS tighten further

European corporate credit derivative indexes continued a tightening bias on Monday on increased confidence that the United States would avoid dipping back into recession following strong economic and jobs figures. The upbeat mood is expected to drive more issuance in the primary market, including a hybrid corporate bond deal from British utility Scottish & Southern, which ends a week-long roadshow in Frankfurt on Tuesday.
Trading volumes may be slightly muted on Monday, however, with US markets closed for the Labour Day holiday. In early trade, the investment-grade Markit iTraxx Europe index was at 103.75 basis points, 1.75 basis points tighter than late on Friday, a trader said. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 474 basis points, 9 basis points tighter.