U.S. corporate credit risk gauge falls to lowest level in a week

A benchmark measure of U.S. corporate credit risk fell to the lowest level in a week amid speculation policy makers are moving closer to a deal to contain the euro-area debt crisis.

The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, decreased 2.2 basis points to a mid-price of 131.5 basis points at 8:25 a.m. in New York, according to index administrator Markit Group Ltd.

The index, which typically falls as investor confidence improves and rises as it deteriorates, has dropped from a more than two-year high of 150.1 on Oct. 3 as investors have wagered that European leaders may prevent the upheaval in the region’s debt markets from infecting banks’ balance sheets globally.

European finance ministers meet in Brussels today to lay the groundwork for an Oct. 23 gathering of government leaders that had been the deadline for a solution to the debt crisis. A further summit was scheduled for Oct. 26 yesterday after Germany

and France said the European Union needs more time to seal a “global and ambitious” accord.

Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.