01 July 2014 by HCM
There were plenty of positive moves which impacted constituents of ITXEX21 (iTraxx Crossover) in Europe. The 5 year CDS of CONVAT (ConvaTec Healthcare) gapped 50bps tighter on the back of headlines on Bloomberg suggesting that the owners have been approached by buyers and are also considering an IPO. CWCLN (Cable and Wireless Communications Plc) closed 20bps tighter as an article published overnight in the UK press reported that an American group would be bidding for the company. PORTEL (Portugal Telecom SGPS SA) erased yesterday’s move when the 5 year risk premium of Banco Espirito Santo (BES) ripped tighter. But all that was not enough to make iTraxx Crossover outperform iTraxx Main on a beta adjusted basis. The whole BES saga which spooked investors and led them to buy iTraxx Financial Senior protection during the last few sessions, completely reversed course today as risk changed hands with a new array of clients (US high yield and European distressed) looking at the BES risk. Subsequently iTraxx Financial protection was sold aggressively, and iTraxx Main was dragged tighter with it, outperforming iTraxx Crossover.