* Virgin Media comes to market with 500 mln sterling deal
* Demand for cash corporates to remain strong
* Pace of spread tightening to slow
By Simon Jessop
LONDON, Jan 12 (Reuters) - European CDS indexes widened slightly on Tuesday, tracking weakness in equities, while Virgin Media led high-yield issuance in the cash bond market, continuing its recent strong run.
By 1048 GMT, the investment-grade Markit iTraxx Europe index was at 66.75 basis points, according to data from Markit. That is 1.5 basis points wider versus late on Monday, according to data from BGC Partners.
The Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 392 basis points, 9 basis points wider.
Both indexes have tightened sharply from late December, as this relatively illiquid market is driven by fairly light flows.
Meanwhile, the cash market has been supported despite an increase in primary bond issuance, although the volume seen in the non-financials corporate bond market remains below last year's level.
"While credit spreads have started the year with a bang, primary issuance is still in its early stride for the year," said BNP Paribas.
Total European corporate issuance of 3.6 billion euros ($5.23 billion) since the start of the year is sharply below the 16 billion euros seen in the same period to Jan. 11 in 2009, which was a record year for issuance, the bank added in a note.
Among corporate issues announced on Tuesday, Britain's Virgin Media said it planned a 500 million pound ($805.3 million) high yield bond refinancing, while in the high grade sector, Gas Natural mandated a three-part bond comprising five-, eight- and 10-year tranches. The technical factors driving the cash market are not expected to disappear in the short-term, said Suki Mann at Societe Generale.
"(There is) too much sidelined cash chasing too little product and a market bereft of any meaningful liquidity," he said in a note, although the pace of spread tightening is set to slow considerably, he added. (Editing by Sharon Lindores) ($1=.6209 Pound) ($1=.6889 Euro)