Asia-Pacific Bond Risk Falls, Credit-Default Swap Prices Show

The cost of protecting Asia-Pacific bonds from non-payment decreased, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 2 basis points to 106.5 basis points as of 8:32 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The Markit iTraxx Australia index fell 1 basis point to 110 as of 11:18 a.m. in Sydney, according to Nomura Holdings Inc.

The Markit iTraxx Japan index was little changed at 96.5 basis points as of 9:25 a.m. in Tokyo, according to Citigroup Inc. A basis point is 0.01 percentage point.

Credit-default swap indexes are benchmarks for protecting debt against default and traders use them to speculate on credit quality. An increase suggests deteriorating perceptions of creditworthiness and a drop shows improvement.

The swaps pay the buyer face value in exchange for the securities if a borrower fails to meet its debt agreements.

To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net.

To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net.

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