Slow but volatile start greets credit as euro falls further

Credit markets have recommenced trading with more volatility today amidst another fall in the euro and liquidity hampered by much of Europe being on holiday. Despite large swings, resultant credit spreads remain resilient however, with iTraxx Europe back to 2bp wider at 121bp having been quoted as tight as 116bp at one stage early on. Likewise Crossover jumped inwards to 566bp but is currently around 4bp wider from Friday’s close at 588bp.

Much of today’s sentiment on the euro has been prompted by news out of Spain over the weekend that Bank of Spain has taken over CajaSur. There are also noises from unions that the country is heading towards a general strike over austerity measures.

Senior financials are 4bp wider at 163bp and the sub basket 10bp wider at 245bp. Large credit default swap movers amongst the major names include Deutsche Bank, 9bp wider to 157bp, Societe Generale, 7bp wider to 151bp, Lloyds, 10bp wider to 207bp, and RBS, 6bp wider to 209bp.

European ‘peripheral’ sovereigns are also widening out, with Greece 20bp wider to 67bp, Portugal out 10bp to 315bp, Spain and Ireland out 5bp to 200bp and 220bp and Italy out 7bp to 162bp.

Russian energy giant Gazprom is again in trader focus, after it swung in a near-60bp range on Friday. Having closed Friday’s session virtually flat after a massive round of shorting, this morning’s session has seen the name move 10bp wider to 303bp.

Larger corporate credit movers today include Fiat, out 30bp to 505bp, HeidelbergCement, out 20bp to 472bp, Continental, out 17bp to 497bp, and Renault, out 16bp to 364bp.

Despite continued strikes at British Airways today and the turmoil that disrupted the company’s discussions with unions over the weekend, CDS in the name is stable today at around 670bp.