March 26 (Bloomberg) -- The cost of insuring against default on European corporate debt fell, according to BNP Paribas SA.
The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings dropped 6.5 basis points to 591.5 basis points. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings fell 1.5 basis points to 116.75. A decline signals improvement in perceptions of credit quality.
The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers fell two basis points to 208 and the subordinated index declined 3.5 to 324.5.
A basis point on a credit-default swap protecting 10 million euros ($13.2 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.
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