A gauge of U.S. corporate credit risk fell for the fourth consecutive day to the lowest since the inception of the new version last month, as initial jobless claims rose by less than economists expected last week.
The Markit CDX North America Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, decreased 0.9 basis point to a mid-price of 95 basis points at 5:26 p.m. in New York, according to prices compiled by Bloomberg. Contracts tied to CenterPoint Energy Inc. narrowed to the lowest level in more than a year.
Labor Department figures showed today that first-time claims for unemployment insurance rose to 367,000 last week, up from a two-month low and less than the median estimate of economists surveyed by Bloomberg. European Central Bank policy makers left their benchmark rate at a historic low of 0.75 percent and said the ECB stands ready to purchase government bonds, putting the burden on Spain to decide whether it wants a bailout.
“Every day we seem to rally on some headline that Spain is about to get money, and fade on some story that they might not ask yet,” Peter Tchir, founder of New York-based TF Market Advisors, wrote in a note today.
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.
Societe Generale SA sold $1.25 billion of 2.75 percent, five-year bonds in its first benchmark offering of dollar-denominated debt this year, Bloomberg data show. The notes, priced to yield 215 basis points more than similar-maturity Treasuries, will be used for general corporate purposes.
Banco Bilbao Vizcaya Argentaria SA, the Spanish bank, sold $2 billion of 4.664 percent, three-year, dollar-denominated debt, Bloomberg data show. The bonds yield 435 basis points more than the benchmark and will be used for general corporate purposes, according to a person familiar with the offering.
The average relative yield on investment-grade debt fell 3 basis points, led by spreads on the subordinated bonds of financial companies, which narrowed 6 basis points, Bloomberg data show. The average yield on speculative-grade debt decreased 5 basis points.
Credit swaps protecting against the default of Houston-based CenterPoint Energy for five years fell 6.8 basis points to 100 basis points at 3:30 p.m. in New York according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. That’s the lowest since it reached 100 basis points on Aug. 18, 2011.
The electric and natural gas utility company’s contracts are down from 136 basis points on June 5. Demand for natural gas may be poised to rise as prices stabilize and use in commercial and industrial applications picks up, according to an Aug. 28 report by Samuel Brothwell, a senior analyst with Bloomberg Industries.