Marathon Oil’s Credit-Default Swaps Surge on Spinoff Proposal

The cost to protect Marathon Oil Corp.’s debt from losses surged as the largest refiner in the U.S. Midwest prepared to spin off its fuel-making business and create two independent energy companies.

Credit-default swaps on Marathon rose 3.8 basis points to 73 basis points, according to data provider CMA. The swaps climbed because Marathon’s plan may shift the debt that the contracts protect to a less creditworthy unit, a so-called succession event, said Michael Reiner, a credit strategist with Societe Generale SA.