European credit spreads widened on Tuesday on fears about the banking sector after losses at State Street Corp added to concerns that Royal Bank of Scotland would not pay coupons on subordinated debt. By 1645 GMT, the Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 1,022.75 basis points, according to data from Markit, 32.75 basis points wider than late on Monday.
The investment-grade Markit iTraxx Europe index was at 171.50 basis points, 8.50 basis points wider. Five-year credit default swaps on many banks widened sharply. CDS on RBS were nearly 30 basis points wider at around 150 basis points, on Banco Santander were 16 basis points wider at 127 basis points and on Bank of Scotland were around 25.5 basis points wider at around 130 basis points.