European corporate credit defaults swap spreads were tighter on Monday as relief at Abu Dhabi's rescue of Dubai World swept through the market. By 1612 GMT, the investment-grade Markit iTraxx Europe index was at 79.75 basis points, according to data from Markit, 1.75 basis points tighter versus late on Friday. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 476.50 basis points, 8.50 basis points tighter.
Oil-rich emirate Abu Dhabi pledged $10 billion to Dubai World, dispelling fears over a possible default on Nakheel, Dubai World's property company subsidiary's $4.1bn Islamic bond. Investors had become increasingly concerned as Abu Dhabi took its time to step-in, said Jenkins. The emirate left it until the December 14 deadline to make its move. Investor concern has now shifted to Greek sovereign debt. The country's debt rating was cut to BBB+ by Fitch last week amid worries about its budget deficit which is stands at 12.7 percent of GDP this year.