NEW YORK (Bloomberg) — Bermuda-based Primus Guaranty Ltd., the only publicly traded company that makes most of its money investing in credit-default swaps, said it had a net loss in the first quarter as the market value of its portfolio fell.The net loss was $9.7 million, or 22 cents a share, compared with a net profit of $35.1 million, or 79 cents, a year earlier, the Bermuda-based company said yesterday in a statement. Excluding unrealised losses on the value of its credit swaps, which the company typically holds until maturity, Primus said profit rose to $13.2 million, or 30 cents a share, from $11.6 million, or 26 cents.

Primus boosted its revenue from credit-default swaps as the cost of the derivatives contracts jumped to a five-month high in March, on concerns that problems in the housing market will deflate consumer spending. Credit swaps are financial instruments based on bonds and loans that are used to speculate on the ability of a company or other borrower to repay its debt. Primus and others that sell the contracts are paid fees in exchange for agreeing to cover losses in case of a default. Revenue excluding the loss in market value jumped 28 percent to $30 million, from $23.4 million a year earlier, Primus said in the statement.

The biggest revenue increase came from contracts that protect against losses in so-called collateralised debt obligations, which repackage bonds, loans and credit-default swaps and use the income to pay investors.

Primus sold contracts based on $600 million of such securities, up from $200 million in the fourth quarter and $100 million a year earlier, according to data posted on the company's web site.

Revenue from those contracts jumped to $1.37 million, a more than five-fold increase from $208,000 a year earlier, the company said.

Primus also increased its bets on the ability of individual companies to repay their debts. The company sold contracts on $525 million of that debt, the largest amount since the second quarter of 2006. The company's total credit-default swap portfolio rose to $16.5 billion, up from $14.5 billion a year earlier.

Primus's profit excluding the loss in market value of its portfolio fell short of the 32 cents analysts expected, according to the average estimate of five analysts surveyed by Bloomberg.

Primus had been investing in fewer new credit-default swaps as the contracts were paying some of the lowest risk premiums on record.