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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 161 basis points as of 8:59 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is on course for its lowest close since April 4 and biggest daily drop since March 15, according to data provider CMA.

The Markit iTraxx Australia index declined 5 basis points to 151 as of 10:11 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The benchmark is set for its lowest close since April 5 and biggest one-day decline since Feb. 6, 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 fell 4.5 basis points to 161.5 basis points as of 9:30 a.m. in Tokyo, Citigroup Inc. prices show. That’s on course for its lowest close since April 6 and biggest decline since March 27, according to CMA prices.

Credit-default swap indexes are benchmarks for insuring 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: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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

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