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Credit Swaps Rise to Two-Month High on Emerging-Market Concern 

January 27, 2014
Jessica Summers, Bloomberg

A gauge of U.S. corporate credit risk jumped to the highest in more than two months as investors sought protection from losses amid a plunge in emerging markets from Argentina to Turkey.

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark used to hedge against losses or to speculate on creditworthiness, climbed 4.9 basis points to 72.7 basis points as of 5:29 p.m. in New York, the highest level since Nov. 19, according to prices compiled by Bloomberg. The index increased 7.5 basis points this week, capping the biggest weekly jump since June.

Investors sought protection as everything from stocks to emerging-market currencies plunged following a report yesterday signaling weakness in China’s economy, the world’s second-biggest. A measure of debt-market stress known as the two-year swap spread jumped to the highest since September, while the average cost to protect against defaults by the six-biggest U.S. banks rose the most in seven months.

Read more: Bloomberg

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