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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 158 basis points as of 8:42 a.m. in Hong Kong, Credit Agricole SA prices show. The gauge fell 11 basis points last month and has ranged between 132.5 basis points and 210 basis points this year, according to data provider CMA.

The Markit iTraxx Australia index fell 1 basis point to 167 as of 10:42 a.m. in Sydney, Credit Agricole prices show. The measure dropped 19 basis points in July, its biggest monthly decline since January, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index was unchanged at 185 as of 9:27 a.m. in Tokyo, Deutsche Bank AG prices show. The benchmark has ranged between 136 basis points and 217 basis points this year, 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 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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