Japan Corporate Bond Risk Rises, Credit-Default Swap Prices Show

The cost of insuring corporate bonds in Japan against non-payment rose, according to credit-default swap traders.

The Markit iTraxx Japan index increased 3 basis points to 193 basis points as of 9:44 a.m. in Tokyo, Deutsche Bank AG prices show. That’s the first increase in more than a week, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan added 0.5 basis point to 194.5 basis points as of 8:44 a.m. in Hong Kong, Credit Agricole prices show. The Markit iTraxx Australia index fell 1 basis point to 183 as of 11:44 a.m. in Sydney, according to Credit Agricole SA.

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.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

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

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