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28 November 2017 by lberuti

The market certainly felt strong today. The tone was set by US equities which are showing absolutely no sign of fatigue. Credit indices are somehow following the same pattern, despite a clear lack of market participation. Indeed, volumes were in line with those seen around Thanksgiving. Credit indices all participated in the move, including iTraxx Crossover (ITXEX), which benefitted from the results of PIZEXP (Pizza Express). The latter were less catastrophic than people had feared, and the company’s 5-year risk premium was 200bps tighter on the day. But if you take a few steps back, it has recently been a rare occurrence. If all other European credit indices are back to their tightest levels, ITXEX is still some 10bps away from them. Despite a few positive stories in the recent past – like yesterday’s orphaning rumours surrounding NovaFives -, some of its constituents have been put under severe pressure over the last few weeks and are struggling to recover. The appetite for protection of names like NewLook, Astaldi, Altice or SFR to name a few has not been satiated and their bid shows no sign of fading.