Nov. 19 (Bloomberg) -- The cost of protecting corporate bonds from default rose to near a record on concern U.S. automakers won't get a bailout in time to prevent them failing.

Credit-default swaps on the Markit CDX North America Investment-Grade index of 125 companies in the U.S. and Canada jumped 14 basis points to 239 basis points as of 8:32 a.m. in New York, according to broker Phoenix Partners Group. The CDX index reached a record 245 basis points on Oct. 24, Phoenix prices show. In London, the Markit iTraxx Europe index rose 12.5 basis points to 176.5 basis points, JPMorgan Chase & Co. prices show. Contracts linked to auto suppliers Valeo SA, GKN Plc and Continental AG rose to all-time highs.

General Motors Corp.,Ford Motor Co. and Chrysler LLC will later plead for government aid for a second day before a House Financial Services Committee. They are seeking $25 billion in unconditional loans to prevent what GM's Chief Executive Officer Rick Wagoner said yesterday would be a ``catastrophic collapse'' for the economy.

``I think they will get an aid package with strings attached, and that means it won't come quickly enough to change their fortunes dramatically,'' said Vivek Tawadey, head of credit strategy at BNP Paribas SA in London. ``Some form of managed bankruptcy may be part of the solution.''

Bankruptcy Threat

The bankruptcy threat is driving up the cost of default protection around the world, with credit-default swaps on Valeo, France's second-largest auto-parts maker, climbing 43 basis points to 523, according to CMA Datavision prices. Redditch, England-based GKN, which generates about two-thirds of its revenue from automakers including GM and Ford, jumped 39 basis points to 635. Continental, Europe's second-largest car-parts maker based in Hannover, Germany, increased 60 to 765.

Credit markets have already priced in almost certain odds of defaults by GM and Ford during the next five years.

Credit swaps on GM today were quoted at a mid-price of 76 percentage points upfront, Phoenix prices show. That means it would cost $7.6 million initially and $500,000 a year for five years to protect $10 million in GM debt from default.

Ford contracts were quoted at 72.5 percentage points upfront, according to Phoenix.

GM needs $10 billion to $12 billion in government aid, Ford needs $7 billion to $8 billion and Chrysler is seeking $7 billion, company executives said yesterday. Chrysler burned $3 billion of cash in the third quarter and had $6.1 billion remaining at the end of the period.

Bondholder 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. An increase indicates deterioration in the perception of credit quality; a decline signals the opposite.

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

Contracts on the Markit iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings increased 24 basis points to 900, JPMorgan prices show.

The price of the Markit LCDX index linked to U.S. leveraged loans, which falls as sentiment worsens, dropped 1 percentage point to a mid-price of 81.25 percent of face value, according to Goldman Sachs Group Inc. The index fell to a record low of 81 reached last month.

To contact the reporters on this story: Michael Shanahan in London mshanahan3@bloomberg.net; Shannon D. Harrington in New York at sharrington6@bloomberg.net

Last Updated: November 19, 2008 08:55 EST