Japan credit default spreads resume tightening due to CDO activity

Reflecting the tightening trend, the CJ 50 Index of the 50 most liquid Japanese credit default swaps - an index set up by Goldman Sachs, BNP Paribas, Credit Lyonnais and Bank of Tokyo Mitsubishi - was fixed at 51.90bp on Wednesday, tighter by 2.85bp from last week’s fixing.

All the sectors that previously suffered from poor sentiment and uncertainty tightened back near their lowest levels due to a large CDO placement this week, said one trader.

The CDO activity also explained why there has b

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