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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan gained 1 basis point to 190 basis points as of 8:37 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is poised for the first daily increase since June 8, according to data provider CMA.

The Markit iTraxx Australia index advanced 1.5 basis points to 194 as of 10:09 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The benchmark is down about 17 basis points from a six- month high of 211 reached on June 4, according to CMA, which is owned by CME Group Inc. and compiled prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index rose 1 basis point to 181 as of 9:16 a.m. in Tokyo, Deutsche Bank AG prices show. The index has traded between 181 and 204 basis points this month, CMA prices show.

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: Taejin Park in Seoul at tpark31@bloomberg.net

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

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