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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 1 basis point to 148 as of 8:49 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge decreased 10 basis points this month, according to data provider CMA.

The Markit iTraxx Australia index dropped 1 basis point to 156 as of 10:42 a.m. in Sydney, National Australia Bank Ltd. (NAB) prices show. The measure has also declined about 10 basis points this month, 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 little changed at 184.5 as of 9:25 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark has traded this month between 207 and 184.2, where it closed yesterday, 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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