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By Bryan Keogh
June 11 (Bloomberg) -- The cost of protecting U.S. corporate bonds from default rose, reversing an earlier decline, trading in credit-default swaps shows.
Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 12 rose 2 basis points to a mid- price of 127 basis points as of 4:31 p.m. in New York, according to Barclays Capital. The index had earlier declined to 121.5 basis points.
An increase in the index, which is used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, typically signals deterioration in investor confidence.
A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.
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