Credit Swaps Rise Most Since June Amid Regulatory Uncertainty
January 23rd, 2010Via: Bloomberg:
The cost to protect against defaults on U.S. corporate bonds rose this week by the most since June as President Barack Obama proposed reigning in banks and Chinese regulators said credit growth would be restricted this year.
Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, climbed 12.7 basis points this week to 96.2 basis points, according to CMA DataVision prices. An increase in the index signals a decline in investor confidence.
The index has risen eight straight days, the longest stretch since June 2008, on signs of fresh risks to global economic growth. Chinese regulators told some banks on Jan. 20 to trim lending, and the next day Obama proposed limiting the size and trading activities of U.S. financial companies as a way to reduce risk-taking. Last week Moody’s said the Greek economy faces a “slow death” from deteriorating finances.
