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 European investors seem to be gearing up for more turmoil in the debt markets as spreads on credit default swaps widened to levels not seen since Lehman Brothers Holdings Inc. failed in September. Markets appear to be bracing for the fallout as corporations around the globe get slammed by the full effects of the credit crunch.
FTAlphville writes:
The European Markit iTraxx main index of investment grade borrowers' CDS was quoted at 162.44bp versus a closing level of 158.25bp Monday, meaning it now costs €162,440 per year to protect a €10 million basket of European investment-grade bonds. The iTraxx crossover index of mostly junk rated borrowers' CDS was quoted at the dizzy heights of 880bp having closed at 863bp Monday. And the HiVol index of the most volatile investment grade borrowers' CDS spreads (sectors exposed to the economy such as retail dominate it) was quoted at 354bp versus 341.5bp.With banks on shaky ground, consumer spending disappearing and record levels of debt coming up for refinancing over the next 24 months, it looks like the worst may still be yet to come. - George White See FT Alphaville post Categories Deal Video
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