European credit spreads were relatively steady on Wednesday, with the focus centred on the primary market as more borrowers such as National Grid Gas took advantage of recently narrowed spreads. By 1520 GMT, the investment-grade Markit iTraxx Europe index was at 74 basis points, according to Markit data, 1 basis point wider versus late on Tuesday.
The iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was 3.75 basis points wider at 428.75 basis points. "We are lacking news, but what is interesting is that for the first time in a very long time credit is not tracking the moves in equity markets," a trader said.
While credit derivative indexes edged wider on Wednesday, albeit in thin volumes, European shares were 0.8 percent higher for example. New corporate issues continued to hit screens, a day after GlaxoSmithKline raised a hefty $9 billion via a four-tranche deal.
National Grid Gas, a unit of British utility National Grid raised 750 million euros ($1.2 billion) via a 5-year bond. Strong demand of more than 3 billion euros enabled the borrower to tighten guidance on the bond to mid-swaps plus 77 basis points from initial guidance set at mid-swaps plus around 80 basis points.
A unit of Network Rail, which runs Britain's rail infrastructure, also plans to sell a five-year benchmark dollar bond in the near future subject to market conditions, the banks managing the sale said on Wednesday. The bond is likely to be priced on Thursday. Financials also continued to flood the market. Of note, was Royal Bank of Scotland's 5-year senior unsecured bond, which saw demand of about 5 billion euros.