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Rock Solid like a European iTraxx

12 August 2015 by pdonnat

The credit market was a safe harbor today. The European iTraxx credit index complex hardly moved wider during the day while the equity market was turning sour. The iTraxx Europe Crossover Series 23 is closing only 8bps wider at 317bps and squeezing tighter after the London close. The credit indices are rock solid. The weakest name like Abengoa or Norske Skogindustrier are trading at 70% plus 5% running. The premiums have little room to trade higher. For a further widening, the weak B are at risk but we need a real indiscriminate sell off to see the index back to a 400 handle. Investors are sensitive to the credit quality and there is no indiscriminate selling pressure in the market. Only large redemption or unabated new issues could affect the global strength of the asset class.