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The Collapse Tighter

23 February 2017 by lberuti

The credit market felt firm throughout the session. Credit indices would have closed a tad better across the board were it not for a late day wobble following a rapid increase of 4bps to 75bps of the OAT/BUND spread towards the close. The most striking feature of the session was actually the collapse tighter of a number of Crossover names. It is not often that 5 constituents of iTraxx Crossover (ITXEX) tighten in excess 30bps for completely unrelated reasons, while the index is left unchanged. SELNVX (Selecta Group BV) closed 100bps tighter at 700bps after an article published in the Italian press mentioned Argenta – an Italian vending machine operator – could be up for sale and that a merger with SELNVX followed by an IPO of the newly created entity would be on the table. DRYMIX (Dry Mix Solutions) closed 45bps tighter at 139bps, after a refinancing of the company’s debt was announced paving the way for an orphaning of the entity. WINDIM (Wind Acquisition Finance) closed 38bps tighter at 262bps after releasing good numbers and saying that they are happy with their current structure. Without many names widening significantly - New Look was the odd one out -, that was enough to send the basis of ITXEX back to its recent wides despite the absence of any sharp move of the market as a whole, which is fairly unusual.