The cost of protecting Asia-Pacific corporate and sovereign bonds from default dropped, according to traders of credit-default swaps.
The Markit iTraxx Japan index decreased 2.75 basis points to 118.25 basis points as of 9:36 a.m. in Tokyo, Deutsche Bank AG prices show. That’s on course for the lowest close since March 22, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets.
The Markit iTraxx Australia index fell 4.5 basis points to 114.5 basis points as of 10:35 a.m. in Sydney, according to Deutsche Bank. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan dropped 5 basis points to 115 basis points as of 8:36 a.m. in Hong Kong, prices from the Frankfurt-based bank show.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements. A basis point is 0.01 percentage point.
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