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Indices and Single Names Divergence

23 April 2014 by HCM

When you look at this grapple which clearly shows that the risk premia of single names kept their recent positive momentum, it is difficult to imagine that credit indices closed wider across the board without exception. Investors still do not see any default occurring in the current environment, thanks to the unlimited liquidity available to corporates as evidenced by the recent Altice jumbo deals, and they have given up buying protection on single names at the moment. But people do not feel completely at ease with the level of the market. Even factoring in any potential QE by the ECB in the future, the performance of credit assets since the beginning of the year, but particularly since the roll, is impressive. The temptation to take some chips off the table proved too hard to resist for some, and, for that purpose, they used the most liquid instruments, credit indices.