European credit spreads tightened on Friday, along with a rally on share markets, after German business sentiment and US durables goods data came in better than expected. By 1443 GMT, the Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 843 basis points, according to data from Markit, 7 basis points tighter versus late on Thursday.
The investment-grade Markit iTraxx Europe index was at 152 basis points, 2 basis points tighter. The April reading for the German Ifo index of business sentiment came in stronger than expected, encouraging investors to believe that the worst of the recession is over.
US numbers also proved supportive, with new orders for US durable goods slipping only 0.8 percent in March, far less than analysts had expected. Wall Street opened up on the positive data. Ford Motor Company also reported a smaller than expected quarterly loss, saying it was on track to at least break even in 2011 and did not expect to seek US government loans.
However, UniCredit (HVB) retained a sell recommendation on the name given the challenge to reduce the cash burn rate of around $1 billion to $2 billion a month. In addition, asset disposals or bond refinancing are "currently almost impossible at reasonable conditions" said the bank's automotive credit analyst Dr Sven Kreitmair.