The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 459 basis points, 15 basis points wider. "The overnight driver has been the wave of reforms announced by President Obama last night," said analysts at Barcap, in a note. Comments from Obama late Thursday continued to drive the markets, as his plans to overhaul the US banking sector to curb banks' size and risk taking received cautious backing from governments in Europe.
Sovereign CDS from Greece, Portugal and Iceland have all widened in recent weeks on fears over the health of their public finances. Although corporate CDS indexes widened on risk aversion after Obama's comments, cash markets were little affected. "So there we have it. The iTraxx indices have got crushed on the back of the Obama comments and lower stocks, but cash is behaving itself - and so it should," said SocGen's Suki Mann, in a note.