Things are going to get ugly in Europe ... at least that's what movement on credit default swaps for European corporate debt are indicating. The Markit iTraxx Crossover index, a measure of the spreads on swaps for 50 mostly junk-rated European corporations, rose 39 basis points to reach an all-time high of 929 basis points Monday, according to
FT Alphaville.
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With gloomy economic times ahead, investors are increasingly rushing to insure themselves against default on
lower-rated corporate debt as they calculate that weak
companies will be the first to fall as consumers cut back on spending. Expectations for investment-grade debt are
more optimistic, although still cautious, as the iTraxx Europe index
was up roughly 13 basis points to around 183 basis points. -
George
White
See FT Alphaville post
