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Another Strong Day For Xover Newcomers

31 March 2014 by HCM

Despite a small consolidation towards the end of the session, today was strong across the board. But one subset of names has performed particularly well: the names which entered the iTraxx Crossover index 10 days ago. Most of them are high beta, but they are perceived as good quality names, and investors are happy to get some yield together with some diversification. It is also worth noting that on most of these names, selling the CDS offers more yield than buying their bonds with an equivalent maturity. As long as these positive bases will be up for grab, there is all reason to believe that this outperformance will continue in a bullish scenario.