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 dropped 4 basis points to 176 basis points as of 8:24 a.m. in Hong Kong, according to Credit Agricole SA. (ACA) The gauge is set for its lowest close since May 8, according to data provider CMA.

The Markit iTraxx Australia index fell 4 basis points to 181 as of 10:25 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The index is headed for its lowest close since May 11, 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 declined 3 basis points to 174 basis points as of 9:38 a.m. in Tokyo, Citigroup Inc. prices show. The index has ranged between 217 basis points and 153 basis points this quarter, CMA data 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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.