Feb. 9 (Bloomberg) -- The cost of protecting Asia-Pacific bonds from default declined ahead of a U.S. Senate vote on a $780 billion economic stimulus plan.

The Markit iTraxx Japan index of credit-default swaps on the debt of 50 investment-grade borrowers fell 7 basis points to 392.5 at 10:25 a.m. in Tokyo, Credit Suisse Group AG prices show. The Markit iTraxx Australia index dropped 10 basis points to 315 at 9:48 a.m. in Sydney, Citigroup Inc. data show.

“In the short term, positive news from the U.S. about both the stimulus and bank rescue plans may keep on supporting risk appetite and Asian markets,” Sebastien Barbe, a Hong Kong-based economist with Calyon, wrote in a research note today.

U.S. President Barack Obama says the stimulus is needed to avert a deeper recession, and he wants a bill on his desk by Feb. 16. A key procedural vote on the Senate’s $780 billion measure is scheduled for today, with a final vote tomorrow. The Senate measure must then be reconciled with an $819 billion plan the House approved last month.

Employers who cut 2.6 million American jobs last year may continue to shed workers, prolonging the economic slump. Obama is pushing for quick passage of the stimulus plan that aims to save or create as many as 4 million jobs.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 7 basis points to 345 at 9:40 a.m. in Singapore while the region’s high-yield benchmark was quoted at 1,150 basis points, according to ABN Amro Holding NV.

Nomura Contracts

Contracts on the senior debt of Nomura Securities Co., a unit of Nomura Holdings Inc., Japan’s biggest brokerage, rose to 450 basis points. The parent’s shares fell to the lowest in 26 years after the company said it may sell as much as 300 billion yen ($3.3 billion) of common stock to replenish capital.

Default swaps on South Korean government debt declined 5 basis points to 325, ABN Amro prices show.

Credit-default swaps on the Markit CDX North America Investment-Grade index of 125 companies in the U.S. and Canada fell 5.5 basis points to 193.5 on Feb. 6, according to broker Phoenix Partners Group. Contracts on the Markit iTraxx Europe index of 125 companies with investment-grade ratings declined 7 basis points to 149, according to JPMorgan Chase & Co.

Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on changes in credit quality. The swaps pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements.

A basis point, or 0.01 percentage point, is worth $1,000 on a swap protecting $10 million of debt.

To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net

Last Updated: February 8, 2009 21:57 EST