That is 1 basis point tighter versus late on Wednesday, according to data from BGC Partners. Five-year CDS on Hellenic Telecommunications Organisation widened by 14.5 basis points to 143.5 basis points, on Portugal Telecom by 5.5 basis points to around 97 basis points, and on Banco Santander by 7.5 basis points to around 109 basis points.
On January 11, Santander and Portugal Telecom were trading at levels roughly equal to the Europe index at around 65 basis points, while Hellenic Telecom was at around 83 basis points, Markit data showed. Since then, as increasing concerns about sovereign risk have driven CDS wider on peripheral European government borrowers, the CDS on these companies have underperformed the Europe index.
"There is a technical aspect based on a trend that people are entering corporate versus sovereign trades in CDS," said Tim Brunne, a credit strategist with UniCredit (HVB). All three investment-grade companies still are trading at tighter than five-year sovereign CDS, with Greece at 345 basis points, Portugal at around 149 basis points and Spain at around 135 basis points, according to CMA DataVision.
Government borrowers normally are considered safer than corporate borrowers, because they have the power to force tax increases. Investors may be tempted to trade on the view that the relationship between sovereign and corporate borrowers could return to normal but "it may not be the time to make the bet", he said. The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 430 basis points, 5 basis points wider.