A gauge of US corporate credit risk climbed by the most in three months as concern mounted that Europe's debt crisis would spread to Italy and other countries.
The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, rose 4.1 basis points to a mid-price of 95.9 basis points in morning trade in New York, according to index administrator Markit Group Ltd.
That's the biggest climb since the index switched to a new series on March 21. Perceptions of creditworthiness declined for coal miner Peabody Energy Corp and utility Dynegy Inc.
The swaps index gained for a second day as European finance chiefs clashed over how to structure aid for Greece and Italian and Spanish bond prices fell.
The credit swaps index, which typically rises as investor confidence deteriorates and falls as it improves, added 1.7 basis points on July 8 after lower-than-expected job growth dampened investor optimism about the US economic recovery.
"Everybody's reacting to the Italian phenomenon," said Noel Hebert, credit strategist at Mitsubishi UFJ Securities USA in New York.
"Things have kind of soured throughout the course of the morning."
Credit-default swaps on the coal miner and electricity provider Peabody rose 20 basis points to 165 basis points, according to data provider CMA.
From / Gulf News