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

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

The Markit iTraxx Australia index climbed 1.5 basis points to 202.5 basis points as of 10:42 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The gauge is set for its highest close since Nov. 29, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 3 basis points to 200 as of 8:40 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for its highest close since May 23, 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 increased 4 basis points to 196 basis points as of 9:39 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is on track for its highest close since May 25, CMA 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: Rachel Evans in Hong Kong at revans43@bloomberg.net

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

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