The value of euro auto and telecoms bonds fell on new oil price highs and weak stock markets on Thursday, but the cost of insuring French telecom equipment maker Alcatel's debt fell after a rating upgrade.
Crude prices reached more than $53 a barrel and the Dow Jones industrial average was off 0.38 percent in early trade.
"We have been widening most of the day," said a bond trader in London.
General Motors' 8.375 percent euro bond due in July 2033, one of the most heavily traded bonds in Europe, was four basis points wider at 277 basis points over government debt.
Liquid telecoms bonds were about one basis point wider. France Telecom's 8.125 percent euro bond due January 2033 was bid at 108 basis points more than government debt. Telecom Italia's 5.375 percent euro due January 2019 was bid at 122 basis points over government bonds.
Elsewhere, French telecoms equipment maker Alcatel came a step closer to regaining investment grade status when Fitch Ratings raised its rating one notch to BB and said more upgrades were possible.
The rating outlook was changed to positive from stable, Fitch said in a statement, suggesting further upgrades may be possible in the next 12 to 18 months.
"The rating action reflects Alcatel's improving financial profile in recent quarters, the early signs of recovery in a number of Alcatel's markets and the strong liquidity maintained by the company," the agency said.
Alcatel lost its investment-grade ratings from Moody's and S&P in July 2002.
Five-year default swaps on Alcatel dropped five basis points to around 137 basis points after the Fitch upgrade, a trader said, meaning it costs 137,000 euros a year to insure 10 million euros of the company's debt against default.
The CDS was trading around 138 basis points late Thursday.
The cost of insuring against a default by "junk"-rated SAS was unchanged after the Scandinavian airline said revenues from its flights fell 7 percent in August and should be down again in September.
A trader said five-year default swaps on SAS were trading at around 665 basis points on Thursday, meaning it costs 665,000 euros a year to insure 10 million euros of SAS debt against default.
SAS debt is much more costly to insure than that of its European rivals. British Airways credit default swaps trade around 270 basis points. In the broader market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 46.5 basis points more than similarly dated government bonds at 1502 GMT, 0.1 basis points more on the day.
Britain's biggest health and beauty retailer Boots priced a 3-year euro-denominated floating rate note at par with a coupon of 35 basis points over 3-month Euribor, the deal's bookrunners said.
The issue, maturing on October 19, 2007, totals 300 million euros, at the top end of previous indications of a size between 200 to 300 million euros, Barclays Capital and Citigroup said in a statement.