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Greece, Portugal, Ireland Credit-Default Swaps Fall From Records

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June 14 (Bloomberg) -- The cost of insuring against default on Greece, Ireland and Portugal fell from yesterday’s record closing prices, according to traders of credit-default swaps.

Greece declined 3 basis points to 1,605, Ireland decreased 13 to 727 and Portugal was 11 lower at 753, according to CMA at 4 p.m. in London. Italy fell 11 basis points to 167 and Spain declined 9.5 to 273. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments dropped 6 basis points to 212.

The cost of insuring European corporate bonds also fell, signaling improvement in perceptions of credit quality. Contracts on the Markit iTraxx Crossover Index of 40 companies with mostly high-yield credit ratings decreased 12 basis points to 394, according to JPMorgan Chase & Co.

The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 2.5 basis points to 107.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined 5 basis points to 160.5 basis points, and the subordinated index fell 4.5 to 283.

A basis point on a credit-default swap protecting 10 million euros ($14.4 million) of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

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

To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net

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