Bank weakness opens up bond/CDS basis

By GlobalCapital
28 Jan 2016

Last year the Markit iBoxx Euro Banks index was one of the outperforming bond sectors in Europe having returned 1%. The index, which is largely made up of bonds issued by European banks, even managed to outperform defensive sectors such as healthcare and utilities, while Europe’s regulatory oversight and relaxed monetary conditions kept market confidence in check.

Neil Mehta, Markit

2016, however, has started weak and this is seen by the heightened risk in Europe’s major credit indices. The Markit iTraxx Europe Senior Financials index widened to 96bp last week, just 4bp tighter than at the height of the Greek crisis last July, which threatened ...

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