Asia-Pacific Bond Risk Declines to Seven-Month Low, Swaps Show

The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region outside of Japan fell to the lowest in seven months, according to credit-default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 144.5 as of 9:15 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. That puts it on track for its lowest close since Aug. 17, according to data provider CMA.

The Markit iTraxx Australia index dropped 2 basis points to 135 as of 12:16 p.m. in Sydney, Barclays Plc prices show. The measure is near its lowest since Aug. 5, 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 1 basis point to 139.5 as of 10:37 a.m. in Tokyo, Citigroup Inc. 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.

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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