European credit derivative indices moved tighter on Friday, despite a slew of bad news from banks as dealers moved to cover their positions, while the primary issuance market reached record levels. By 1542 GMT, the investment-grade Markit iTraxx Europe index was at 161.25 basis points, according to data from Markit, 8.25 basis points tighter versus late on Monday.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 980.75 basis points, 35.25 basis points tighter. Five-year credit default swaps on HeidelbergCement debt tightened to about 43.25 percent upfront from 46 percent upfront, according to data from Markit. That means it now requires a downpayment of 4.325 million euros ($5.73 million) plus another 500,000 euros a year to buy protection against the default of 10 million euros worth of its debt for a period of five years.
However, new issues in the primary record market continued. Friday's dual-tranche 4.25 billion euro deal from France's biggest supplier of energy, EDF, tipped January into record issuance, with 25.4 billion euros of new debt sold already this month. SG credit analyst Suki Mann said the week was also likely a record one with supply at 13.6 billion euros.