Oil giants probed by EC

Oil companies were in focus on Wednesday after it was revealed that several firms are under investigation by the European Commission.

The EC is investigating if BP, Shell, Statoil and the commodities information service Platts have colluded to fix oil prices. This follows on from probes into Libor and ISDAFix, while the umbrella body for regulators, IOSCO, is currently conducting a broad review into benchmarks.

Credit markets are so far taking a sanguine view of the revelations. BP's spreads were just 1bp wider at 61bps, and Shell's were a modest 2bps wider at 44bps. The latter's CDS are not particularly liquid - they have a Markit Liquidity Score of "2", compared to BP's score of "1" - and they trade in line with their AA rating.

Both firms have solid balance sheets and traditionally trade at tight levels, though the Deepwater Horizon disaster in 2010 showed that litigation risk can cause spreads to widen significantly.

On the economic front there was little to cheer about, with GDP figures showing that the eurozone economy contracted for a sixth consecutive quarter and a weak Empire State manufacturing survey in the US. But the news had a limited impact on spreads - the Markit iTraxx Europe was 1.5bps tighter at 94.5bps and the Markit CDX.NA.IG also 1.5bps tighter at 71.25bps.

In sovereigns, Greek bond yields fell to their lowest levels since June 2010 after Fitch upgraded the country's rating to B- from CCC. The rating agency cited the considerable progress Greece has made in reducing its budget deficit as the main reason for its action.

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