U.S. Corporate Credit Swaps Hold as GDP, Jobless Claims Advance

A gauge of U.S. corporate credit risk was little changed after data showed the U.S. economy grew more than expected while jobless claims rose for the first time in five weeks.

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, eased 0.1 basis point to a mid-price of 89.8 basis points at 9 a.m. in New York, according to prices compiled by Bloomberg.

The U.S. economy grew at a 3.1 percent annual rate in the third quarter, exceeding the highest projection in a Bloomberg survey and compared with a previously estimated 2.7 percent gain, figures from the Commerce Department showed today in Washington. First-time claims for unemployment insurance payments rose 17,000 to 361,000 in the week ended Dec. 15, according to the Labor Department. Improving economic data may ease investor concern that the global economy will falter, hindering companies’ ability to repay debt.

The credit-swaps index typically falls as investor confidence improves and rises as it deteriorates. The contracts 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.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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