Washington : The cost to protect against defaults on US corporate bonds fell amid growing signs of a recovering economy and as concern eased over a possible Greece default.
Credit-default swaps on the Markit CDX North America Investment Grade Index Series 14, which investors use to speculate on creditworthiness or to hedge against losses, declined 1 basis point to a 87.25 basis points, according to Markit Group. The index typically falls as investor confidence improves and rises as it deteriorates.
The US economy expanded at a 5.6 per cent annual rate in the fourth quarter of 2009. While smaller than the government's previous estimate issued last month, the result marked the best performance in six years, figures from the Commerce Department showed Friday.
Oracle forecast the fastest sales growth for new software licences since mid-2008, fresh evidence that the economy is bouncing back from the recession.
Earnings and economic data "are pretty much all telling you the same thing in one form or another, that things have stabilised, they're starting to improve," said Joel Levington, director of corporate credit for Brookfield Investment Management in New York, with $24 billion (Dh88.14 billion) in assets under management.
Chancellor Angela Merkel, after insisting that her taxpayers won't finance a bailout of Greece, negotiated an agreement requiring Germany to put up almost 30 per cent of any European Union loan to the cash-strapped nation.
Merkel convinced EU partners to let the International Monetary Fund take part in any bailout, a position initially opposed by French President Nicolas Sarkozy and ECB President Jean-Claude Trichet. Sarkozy said Friday night after the deal was announced in Brussels that leaders discussed the EU contributing two-thirds of any aid, with the IMF putting up the rest.
Series 14 of the credit-default index, which began trading on March 22, added SLM, the student-loan company known as Sallie Mae, and Freeport-McMoRan Copper & Gold, the world's largest publicly traded copper producer.
