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Credit Swaps Approach Seven-Year Low After Fed Decision 

June 18, 2014
Caroline Chen, Adam Janofsky, Bloomberg

A measure of U.S. corporate credit risk was poised to reach the lowest level in seven years today after the Federal Reserve said interest rates will remain near zero for a “considerable time.”

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, dropped 3.2 basis points to 56.8 basis points at 5:01 p.m. in New York, according to prices compiled by Bloomberg. That would be the lowest closing level since October 2007.

The policy-making Federal Open Market Committee said in a statement today that it’s likely to “reduce the pace of asset purchases in further measured steps” and that it expects rates to stay low for a “considerable time” after its bond-buying ends.

Read More: Bloomberg

 
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