Southern European sovereign, junk debt CDS fall on broad market rally

LONDON (Reuters) - The cost of insuring exposure to debt issued by southern European governments as well as by low-grade European corporates fell on Tuesday amid a broad market rally inspired by hopes that the world economy was on track for re-opening.

The iTraxx Europe crossover index of credit default swaps (CDS), which measures the cost of insuring exposure to a basket of sub-investment grade European companies, fell 23 bps from Monday's close to 455 bps, data from IHS Markit showed.

Meanwhile five-year sovereign CDS for Italy declined 8 bps to 205 bps while Portugal and Spain fell 7 bps and 5 bps respectively.

EU policy makers will debate later this week the outlines of a recovery fund aimed at helping member nations stricken by the fallout of the coronavirus outbreak.

(Reporting by Karin Strohecker, Editing by Abhinav Ramnarayan)