Credit derivatives markets saw a major sell-off Friday morning mimicking the black despair seen in stock markets since the big US collapse late on Thursday.
The banks once again suffered, with Barclays, RBS and UBS all moving about 15 basis points wider, but insurers were hit harder as at the the start of the week, suggesting the market has moved its focus to the next vulnerable target due to the pressure on capital bases in the industry. Bad news from MetLife of the US this week has been one outward signal of that.
Aegon and Swiss Re were among the biggest movers in the market, with their spreads 58.5bp and 56.25bp wider respectively, while Axa was 37.1bp wider.
However, the biggest move was for Glencore International, which has been absolutely hammered over recent weeks, far more than any other resources related company. It was 98.7bp wider at about 747bp Friday morning, which is up from less than 200bp in early September.
The unlisted, private commodities trading and natural resources company has been hit hard by its Australian Nickel mining subsidairy, Minara, and by global growth fears and falling prices in other commodities markets.
The main indices were much worse, with the iTraxx main investment grade list 8.5bp wider at about 140.5bp, although the flight from risk and the general unwinding of leverage hit the Crossover list of junk-rated debt much harder, pushing the spread 67.5bp wider to about 743bp an all-time record.
