Nov. 10 (Bloomberg) -- The cost of protecting investors in Japanese and Australian corporate bonds from default declined, according to traders of credit-default swaps.

The Markit iTraxx Japan index fell 15 basis points to 225 as of 8:58 a.m. in Tokyo, according to prices from Morgan Stanley. The iTraxx Australia was quoted 15 basis points lower at 240 basis points in Sydney, Citigroup Inc. data show. The benchmarks are tied to investment-grade debt and decline as perceptions of credit quality improve.

Traders use the indexes to speculate on changes in credit quality, and credit-default swaps are used to protect against or speculate on default. They 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 that protects $10 million of debt from default.

To contact the reporters on this story: Oliver Biggadike in Tokyo at obiggadike@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

Last Updated: November 9, 2008 19:13 EST