U.S. Corporate Credit Swaps Fall as House Plans Dec. 30 Session

A gauge of U.S. corporate credit risk fell, reversing an earlier increase, on optimism that a budget deal may be reached as the House of Representatives planned a session on Dec. 30.

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, dropped 0.6 basis point to a mid-price of 94.5 basis points as of 3:49 p.m. in New York, according to prices compiled by Bloomberg.

The index earlier in the day climbed as high as 97.5 basis points as Senate Majority Leader Harry Reid said a resolution before Jan. 1 to the so-called fiscal cliff appears unlikely.

The U.S. House will convene the evening of Dec. 30 as lawmakers seek to resolve a budget impasse, Majority Leader Eric Cantor said today in a message posted on Twitter.

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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