The cost of insuring against default on European corporate debt fell, according to traders of credit-default swaps.
Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 22.5 basis points to 722.5, according to JPMorgan Chase & Co. at 7:30 a.m. in London. A decline signals improved perceptions of credit quality.
The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was down 6.5 at 172.5 basis points.
A basis point on a credit-default swap protecting 10 million euros ($13.4 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.