New York: A gauge of US corporate credit risk climbed the most in 15 months during May as Europe's sovereign debt crisis sparked concern that economic growth may slow, making it harder for companies to refinance.
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 25.1 basis points this month to a mid-price of 117.2 basis points, according to Markit Group. The index, which typically rises as investor confidence deteriorates, advanced the most since February 2009, according to CMA DataVision.
Credit markets faltered as corporate bond sales fell to the lowest in a decade this month amid speculation Greece and other nations in Europe cannot meet their debt payments.
A dispute flared between North Korea and South Korea, raising the risk of a broader conflict and triggering a 1.3-basis-point increase in the Markit index.
"The biggest driver of May credit spreads has been investor skittishness over Europe's woes and the potential global fallout," said Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott in Philadelphia.
Contracts on Anadarko Petroleum Corp increased 14.7 basis points to 164.1 basis points, and those on Diamond Offshore Drilling Inc. rose 12.1 basis points to 112.4 basis points, CMA prices show.
President Barack Obama said he is extending a moratorium on deep-water offshore oil drilling permits by six months after the BP Plc Gulf of Mexico spill, while permitting development closer to shore. Anadarko has a 25 per cent stake in the leaking Macondo well.
