Credit derivatives markets were slightly wider Monday morning, with the potential spread of swine flu dominating headlines. But the flu is one of many potential pieces of negative news this week, including the results of the bank stress tests and GM’s restructuring, keeping investors nervous, analysts say.
The impact on airlines was felt by Lufthansa whose premiums on credit default swaps – the cost to buy contracts which give a form of protection against default on debt – rose 5.17 per cent to 159 basis points bid this morning.
The biggest outperformer of the investment grade space, however, was Diageo, with its CDS 3.6 per cent tighter at 88bps bid, according to Markit.
The Europe main iTraxx index of investment grade borrowers’ CDS was 154.33bps versus a closing price Friday of 151.56bps. The iTraxx Crossover index of mostly junk rated borrowers’ CDS was quoted at 850.50bps versus a close of 842.13bps.
The Japan CDS index closed 3.88bps wider at 340bps. US credit derivatives indices closed a touch better across the board Friday, with the CDX North America investment grade index quoted at 174.82bps, or 5.8bps tighter.