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European credit default swaps indices fall, European banks AT1 rise - Reuters News

People demonstrate in front of the Credit Suisse headquarters in Zurich

LONDON (Reuters) - The cost of insuring protection against a basket of European corporate and financial bonds fell on Tuesday, according to S&P Global Market Intelligence data, as credit markets regained some confidence after the rescue merger of Credit Suisse and UBS.

Additional Tier 1 bonds issued by European lenders rose across the sector with UniCredit’s 6.625% issue up more than 3 cents. Those issued by other lenders from Deutsche Bank and UBS rising more than 2 cents, according to data from MarketAxess and Tradeweb.

However, the gains only partially offset the hefty losses of 5 cents or more suffered in the previous session.

AT1s are a type of instrument issued by banks that make up the capital buffers regulators require them to hold.

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The iTraxx Crossover Europe, which measures the cost of insuring exposure to a basket of European corporate junk debt, fell 15 basis points (bps) to 490 bps from Monday close, S&P Global Market Intelligence data showed.

The iTraxx sub financials index dropped sharply by 23 bps to 194 bps from Monday's close while the iTraxx senior was down 11 bps to 106 bps.

The iTraxx Europe Main remained flat at 99 bps, the data added.

(Reporting by Chiara Elisei and Karin Strohecker, Editing by Dhara Ranasinghe)