The support package from the US Government to Citigroup kicked off the week in style. A further positive swing in market sentiment took place after the Fed announced initiatives to support consumer credit. Consequently, CDS indices performed well, and the high activity in the primary market continued. Finally, Moody’s published a report in which they put the Danish banking system as a whole on negative outlook.
Another week, another abbreviation it seems. This time it was the ‘TALF’, or the term asset backed securities loan facility, aimed at supporting the securitization market for consumer, and student loans etc. Apart from the TALF, the major event was obviously the support package for Citigroup. We provide more details on these two initiatives below.
In the credit market we have had a positive week with CDS indices moving tighter along with the positive moves in equity prices. Currently, the investment grade index, iTraxx Europe, trades at 161bp down from 183bp last Friday. The high yield index, iTraxx Crossover, trades at 867bp down from 920bp last week. Generally, secondary market trading has been somewhat limited this week, which is probably due to Thanksgiving and the fact that the (remaining) US brokers have year-end today.
