European credit indexes were mixed on Thursday after J.P. Morgan reported a sink in profits, while German healthcare group Fresenius increased the size of its planned high-yield bond in a sign of strong demand. Spreads moved tighter in the day after initially widening.
By 1540 GMT, the investment-grade Markit iTraxx Europe index was at 169.5 basis points, according to data from Markit, 7.5 basis points tighter versus late on Monday. However, the Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 1,016 basis points, 4.5 basis points wider.
J.P. Morgan Chase & Co said earlier on Thursday its fourth-quarter profit fell 76 percent as it wrote down bad loans, showing that it is struggling with the recession, even though it has avoided the worst of the credit crunch. Citigroup, whose shares were down over 25 percent on Thursday, has brought forward its results by six days to Friday, with analysts looking for a fifth straight multibillion-dollar loss.
Meanwhile, Bank of America may suffer a quarterly loss, its first since it was created in 1998, owing to sharply higher charge-offs, trading losses and loan reserves, according to banking analysts.
The bank is due to report its results on January 20. Germany's Fresenius has increased the size of its bond - the first European high-yield deal since July 2007 - to 275 million euros from an initial size of 200 million euros, a source familiar with the deal told Reuters. However, investors are not expecting a flood of other high-yield bond issues to follow in the footsteps of Fresenius.