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Nov. 24 (Bloomberg) -- 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 12basis points to 829.5, according to JPMorgan Chase & Co. at 8 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 3.25 at 205.75 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers declined six basis points to 335.5 and the subordinated gauge was 12 lower at 579.
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.
--Editor: Paul Armstrong
To contact the reporter on this story: Michael Shanahan in London at Mshanahan3@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net