Summary
- CDS spreads are wider following higher risk aversion
- The Obama administration has put forward a new proposal for regulating the US financial sector
- In Denmark, Fionia Bank Holding has conceded that all equity capital is lost. The healthy part of the bank is expected to be sold.
Headlines from the credit market this week
A sense of weakness seems to have crept into the credit market recently and in the Nordic region it is once again the Baltic exposures of the banks that grabs the negative headlines. CDS spreads have widened somewhat as volatility has increased. In the cash market, which has performed strongly for several months, we also see more offers and we expect this picture to remain the same at least until the end of Q2. Still, the shorter end of the curve continues to be well bid.
The investment grade index, iTraxx Europe, currently trades at 123bp, which is 15bp higher than last week. The high yield index, iTraxx Crossover trades at 750bp up from 682bp last week.
During the week we continued to see good activity in the primary market. If the recent increased volatility gathers speed, the activity in the primary market may slow considerably in the coming months as the summer season is approaching fast.
