European credit indexes tracked losses in European stocks on Thursday, rattled by record high oil prices amid tensions in the Middle East and Asia and concerns over corporate earnings.
The iTraxx Crossover index, made up mainly of high-yield credits, widened 12 basis points to 286 basis points, an index trader said.
"Equities are not looking too healthy at the moment and credit is widening in line with them," he said. "Everything is moving wider."
By 1448 GMT, the FTSEurofirst 300 index of top European shares was down 1.3 percent at 1294.98 points, after oil prices hit a record high near $76 a barrel.
However, the cost of credit default protection on EMI fell, a second trader said, with five-year credit default swaps 5 basis points tighter bid at 163 basis points.
"The movement is on the back of the Sony-BMG hook up being referred back to the competition authorities, which makes the EMI-Warner merger or acquisition seem less likely," the trader said.
The European Court of First Instance earlier on Thursday annulled the European Union's approval of a 2004 merger between Sony Music and BMG in a decision that could force the world's second-biggest music company to be unwound. The ruling has also cast doubt on the viability of combining EMI and Warner Music.
EMI and Warner Music have been in a duel to buy each other out, with both sides making offers worth $4.6 billion.
Elsewhere, VNU credit default swaps stabilised after volatile trading earlier on Thursday.
Five-year credit default swaps tightened 23 basis points to 350 basis points, before widening to be bid at an unchanged 373 basis points, another trader said.
The price means it costs 373,000 euros a year to insure 10 million euros of VNU debt against default.
Market research company VNU, which was taken private earlier this year, revealed details of its new financing structure on Monday, including $1.67 billion in bonds and a seven-year senior unsecured 4.32 billion euro credit facility.
On Wednesday potential investors in VNU asked the company to change the wording to clarify the guarantee structure for the new vehicle, Nielsen Finance, analysts said.
In the cash bond market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 54.2 basis points more than similarly dated government bonds at 1444 GMT unchanged on the day.
Standard & Poor's cut Eurotunnel's credit ratings deep into "junk" on Thursday, citing the stalled creditor talks and significant uncertainty over debt management. The agency also said it may cut the ratings further. But the company's triple-A bonds guaranteed by MBIA are unaffected, and S&P said it still rates the wrapped Fixed Link Finance notes at top-notch investment-grade.
S&P slashed Eurotunnel's senior secured bank loan rating more than ten notches to C from BBB, cut its non-guaranteed senior secured debt rating to C from BB-, as well as its subordinated debt rating to C from CCC+, and its junior subordinated debt rating to C from CCC-.
The 30-year bond drew keen demand from sterling bond buyers, such as Britain's big pension funds and insurers, an official at one of the banks managing the sale said.
And London football club Arsenal sold a 260 million pound bond, the first publicly marketed asset-backed bond issue from Europe's 11.6 billion euro market in soccer revenues.