Bond Risk Falls in Australia, Credit-Default Swap Prices Show

The cost of insuring Australian corporate bonds from non-payment decreased, according to traders of credit-default swaps.

The Markit iTraxx Australia index fell 1 basis point to 158 as of 10:33 a.m. in Sydney, Credit Agricole SA (ACA) prices show. The measure has traded between 128.2 and 182.8 this year, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was unchanged at 167.5 basis points as of 8:33 a.m. in Hong Kong, Credit Agricole prices show. The index rose 1.5 basis points to 166.8 last week, CMA prices show.

The Markit iTraxx Japan index was unchanged at 173 basis points as of 9:34 a.m. in Tokyo, Deutsche Bank AG prices show. The index rose 3.3 basis points to 171.9 last week, according to CMA.

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 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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