May 6 (Bloomberg) -- The cost of protecting corporate debt from default rose the most in three weeks after Fannie Mae said it will raise $6 billion in capital because of a bigger-than- expected loss and U.S. bankruptcy filings soared 49 percent.

Credit-default swaps Washington-based Fannie Mae, the largest U.S. mortgage-finance company, increased 4 basis points to 47, according to CMA Datavision. Contracts on smaller rival Freddie Mac jumped 4 basis points to 47 and the benchmark Markit CDX North America Investment Grade index increased 6.26 basis points to 96.75.

Fannie Mae, which lost $2.19 billion in the first quarter compared with a profit a year earlier, said credit market losses will be worse next year because of mortgage delinquencies and foreclosures. As the housing slump slows the economy, 5,173 companies filed for bankruptcy in the U.S. last month after banks made it tougher for them to borrow.

``There are no indications the credit crisis could be over any time soon,'' said Philip Gisdakis, a Munich-based credit strategist at UniCredit SpA, Italy's biggest bank. ``Banks are tightening lending standards and this shows we may be running toward a credit crunch.''

Most banks increased loan rates over their cost of funds for commercial and industrial borrowing, according to the Fed's quarterly survey of senior loan officers released yesterday. The proportion of banks raising such rates rose to a net 70 percent compared with 45 percent in a January report.

Bankruptcy Filings

Total bankruptcy filings, including those by individuals, were up 31 percent from a year earlier to 93,096, according to statistics compiled from court records by Jupiter eSources LLC in Oklahoma City.

Credit-default swaps on Raleigh, North Carolina-based Martin Marietta Materials Inc., the second-largest U.S. supplier of crushed stone for construction, rose 22 basis points to 149, according to CMA. The company said first-quarter earnings fell 37 percent, trailing analysts' estimates, because of a decline in homebuilding.

Contracts on Calabasas, California-based Countrywide Financial Corp. rose 51 basis points to 324, CMA prices show. Friedman, Billings, Ramsey Group Inc. analyst Paul Miller yesterday urged Bank of America Corp. to abandon its proposed takeover of the mortgage lender.

McLean, Virginia-based Capital One Financial Corp., the credit-card lender whose customers failed to repay $4.16 billion in loans last year, rose 30 basis points to 160.

Debt Protection

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

A basis point on a credit-default swap contract protecting $10 million euros of debt from default for five years is equivalent to $1,000 a year.

The benchmark Markit iTraxx Europe index of 125 companies with investment-grade ratings jumped 9 basis points to 73.5, according to JPMorgan Chase & Co.

Credit-default swaps on the Markit iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 30 basis points to 427, JPMorgan prices show.

To contact the reporter on this story: Abigail Moses in London Amoses5@bloomberg.net

Last Updated: May 6, 2008 10:44 EDT