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Happy New Year

09 January 2018 by lberuti

First, let the teams of Datagrapple and Hellebore Technologies wish you and your loved ones a Happy New Year! The blog session is back following its Christmas break, but our machines have kept crunching numbers, and our time series have kept accruing in the meantime. So far the first few sessions of 2018 have been a turbo charged version of 2017, and risky assets have been reaching new highs. Credit was not left out, and the current series of all indices are trading at their tightest levels, with the exception of iTraxx Crossover (ITXEX). During the last few months of last year, ITXEX had underperformed other European indices on the back of the poor behaviour of a number of its constituents. It was playing catch up since early January, but it unravelled today. Indeed, NEWLOK (New Look) got battered after it was reported in the week-end press that credit insurers would have withdrawn cover to many of the clothes retailer’s supplier. The move certainly reminded some investors of what happened to Toys R Us, and they sent NEWLOK’s 5-year CDS 15pts wider. To insure €1 of the company’s debt against default, it now costs 75cts upfront plus 5cts per year. That alone explained the 2.5bps underperformance of ITXEX compared with iTraxx Main today.