NEW YORK – Investor confidence in U.S. corporate creditworthiness improved for the fourth day after larger-than-forecast growth in U.S. jobs tempered concern that the world’s biggest economy was slowing.
The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 1.3 basis points to a mid-price of 137.6 basis points as of 9:09 a.m. in New York, according to index administrator Markit Group Ltd.
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Payrolls climbed by 103,000 workers after a revised 57,000 increase the prior month that was more than originally estimated, Labor Department data showed Friday in Washington. The credit swaps index, which typically falls as investor confidence improves and rises as it deteriorates, has decreased from 150.1 basis points on Oct. 3 as investor speculation grew that Europe’s leaders are making progress in stemming the region’s debt crisis.
“September’s payrolls data is a light in the middle of the tunnel for the credit markets,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “It’s not enough to ease investor anxiety permanently, but it should provide a catalyst for some relief to these wider spreads.”
The measure this week reached the highest level in more than two years.
Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
