Credit spreads tighten due to CDO upsurge

Credit default swap spreads tightened this week as the continued upswing in collateralised debt obligation (CDO) issuance pulled in offers, and limited debt-issuance reduced demand for credit protection.

Spreads began to widen in thin trading at the end of last week, as mounting fears of a terrorist attack on a UK airport added a bearish sentiment across the market. London-based traders said the credit protection market saw limited flows on Monday, partly due to the public holiday in the US. But trading activity picked up on Tuesday, with credit default swap spreads contracting in a number of sectors.

European telecoms were all trading tighter in the credit derivatives market today. Benchmark

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