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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2.5 basis points to 155 basis points as of 8:31 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is set for the highest close since March 12, according to data provider CMA.

The Markit iTraxx Japan index advanced 2.5 basis points to 153 as of 9:40 a.m. in Tokyo, Citigroup Inc. prices show. The measure is poised for the highest close since March 26, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index increased 2 basis points to 145 basis points as of 11:32 a.m. in Sydney, National Australia Bank Ltd. (NAB) 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: Wendy Mock in Hong Kong at wmock3@bloomberg.net

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

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