European credit derivative indices widened on Thursday as European equities sold off over worries about potential bank exposure to Dubai. By 1553 GMT, the investment-grade Markit iTraxx Europe index was at 88.3 basis points, according to data from Markit, 4.8 basis points wider than late on Wednesday.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 536 basis points, 24 basis points wider. Dubai said on Wednesday that it wanted creditors of Dubai World and its property group Nakheel to agree a debt standstill as it restructures Dubai World.
This created "general weakness" in the investment grade market, said Suki Mann, a credit analyst at Societe Generale, in a note. The exception was the 5-7 year low-beta names where there was still some good support.