01 August 2014 by HCM
It is not all about BES (Banco Espirito Santo), looking back at past week CDS market variations, America is leading the market weakness, the high yield segment leading the investment grade. This trend started with the high yield outflows in the US with no buyer left on the market with the current valuations. The CDX NA investment grade generic contract is closing wider than the 31 December level at 67bps versus 63.5bps. The European credit is still better at 68bps versus 70.5bps. The US investors are still positive with the carry and the roll down but there is little cushion left.