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

The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment increased, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 7 basis points to 215.5 basis points as of 8:46 a.m. in Hong Kong, BNP Paribas SA prices show. The gauge is set for its highest close since Oct. 11, according to data provider CMA.

The Markit iTraxx Australia index advanced 4 basis points to 201 as of 11:34 a.m. in Sydney, Westpac Banking Corp. prices show. The index is also headed for its highest close since Oct. 11, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index rose 2 basis points to 194 basis points as of 9:37 a.m. in Tokyo, Deutsche Bank AG prices 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.

To contact the reporter on this story: Benjamin Garvey in Hong Kong at bgarvey8@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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