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Greece Worries Us No More

30 July 2015 by lberuti

Greece made its way back into the headlines. The IMF reiterated its unwillingness to provide more financing without debt relief by euro-member states and further reforms from the Greek government. The market (very) temporarily blipped wider but that was short lived as investors decided to fade the move and used it as an opportunity to peel hedges. This provided a fairly deep offer to indices and particularly iTraxx Crossover (ITXEX) which compressed compared with iTraxx Main. At the same time, protection remained well bid in the European High Yield space, and quite aggressively so in some cases. Indeed the highest beta names continue to worry the market. ABGSM’s (Abengoa SA) 5-year-CDS was almost 6pts wider at 38.25pts upfront ahead of their results next week, ISOLUX’s was 2.5pts wider at 33.5pts and PORTEL (Portugal Telecom), which is fast closing on its widest levels in 3 years, still has not found any takers despite being 20bps wider at 645bps. ITXEX's negative basis could be here to stay a tad longer.