Activity in the European credit default swap market surged last week, notably in telecom names as market participants awaited a EUR4 billion (USD3.699 billion) convertible bond issue this week from France Telecom. Contrary to expectations, five-year credit default swap prices on the name actually fell from 160 basis points to 135bps because of a surfeit of sellers, said traders.
After corporates in the telecom and auto sectors, notably DaimlerChrysler, issued bonds at tighter than-expected spreads earlier this month (DW, 1/15), signaling a more robust credit market, investors took profits on their positions.
Rupert Walsh, associate director of credit derivatives at Prebon Marshall Yamane in London, said volumes last week were more than double this time last year.
