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Financials Are The Laggards

09 January 2015 by lberuti

It has been a volatile beginning of the year. For all risky assets the first full week of January has been a roller-coaster ride. Credit indices experienced wild swings, with iTraxx Main trading between 61bps and 67bps, and iTraxx Crossover between 368bps and 333bps. But after 6 trading sessions, the year to date changes are minimal across the board. There is one exception though, the financial sector. It saw its risk premia increase up to Wednesday like every other sector, but failed to take part in the rally which followed. iTraxx Financials Senior has widened 8bps from 63bps to 71bps. That is down to a slight increase in basis (13cts or a tad less than 3bps), but most names actually closed wider on the period. There was some good news though, like the €7.5bln capital increase of SANTAN ( Banco Santander SA ) – stock holders might disagree with the “good news” label – or some m&a rumours – MONTE was said to be a target for SANTAN leading to a 30bps tigntening yesterday -, but on the whole investors are still wary of potential exposure to Russia, of what the impact of the Greek elections could be, and of who might be left out of the ECB bond buying program.