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

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

The Markit iTraxx Japan index increased 4 basis points to 191 basis points as of 9:49 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is headed for the biggest one-day gain since June 1, according to data provider CMA.

The Markit iTraxx Australia index advanced 2 basis points to 198 as of 10:38 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The gauge is set for its first daily gain since June 4, 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 climbed 2 basis points to 194.5 basis points as of 8:30 a.m. in Hong Kong, Standard Chartered Plc prices show. The measure is poised for its first increase in June 4, according to CMA.

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: Tanya Angerer in Singapore at tangerer@bloomberg.net

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

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