The cost of insuring against a default by Swiss employment group Adecco edged lower on Thursday, traders said, amid expectations the firm's chief executive would stay in his job.
In the wider market, auto bonds had a subdued session with the cost of credit protection on DaimlerChrysler little changed after the German carmaker posted a rise in first-quarter profit.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 53.5 basis points more than similarly dated government bonds at 1448 GMT, 0.9 basis points higher on the day.
Adecco was given some relief after a source told Reuters that chief executive Jerome Caille would not leave. Adecco shares had fallen over four percent on Thursday amid talk Caille would depart the troubled firm, which has repeatedly postponed publication of its 2003 results.
Around 1345 GMT, five-year credit default swaps on Adecco were quoted at 195 basis points, five basis points lower on the day, traders said. The price means it costs 195,000 euros a year to insure 10 million euros of debt against default. On Wednesday, the cost surged 50 basis points to 200 basis points.
"Since the news came out that the CEO was staying, that's put a lid on the spread widening. There had been a little bit of panic. Now things are stabilising," said one trader.
In autos, DaimlerChrysler posted a 10 percent rise in first-quarter profit and upped its guidance for US arm Chrysler on Thursday, giving CEO Juergen Schrempp a lift before a board meeting that may end his tenure.
The car giant's chief financial officer declined to shed any light on Schrempp's future after sources close to the situation said the CEO and two other board members had tendered their resignations over the firm's relationship with Mitsubishi Motors.
The cost of credit protection on the company rose slightly following the release of the results, before falling to end the day little changed at around 90 basis points, a trader said.
"It's just been a bit of a nothing session," he said. "There is not a lot of significant news-flow and after the recent rally the market is taking a break."
DaimlerChrysler reported operating earnings of 1.541 billion euros ($1.82 billion), beating analyst expectations thanks to cost cutting and higher sales at Chrysler and growth at its trucks business.
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