Jan. 9 (Bloomberg) -- A gauge of U.S. corporate credit risk was little changed after Alcoa Inc. kicked off the corporate- earnings season.
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, eased 0.1 basis point to a mid-price of 85.4 basis points at 8:09 a.m. in New York, according to prices compiled by Bloomberg.
Alcoa reported fourth-quarter sales of $5.9 billion after the market closed yesterday, which beat the $5.6 billion average of 11 estimates. The largest U.S. aluminum producer sees global demand growth for the metal recovering to 7 percent in 2013 as China’s economy rebounds. Signs that the recovery is gaining strength may ease concern that an economic slowdown will impair corporate balance sheets and hinder companies’ ability to repay debt.
The credit-swaps index typically falls as investor confidence improves and rises as it deteriorates. The contracts 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.