Bond Risk Advances in Asia ex-Japan, Credit-Default Swaps Show
The cost of insuring corporate and sovereign bonds from non-payment rose in Asia outside of Japan, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 150 basis points as of 8:42 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge has fallen 10 basis points this month and ranged between 147 basis points and 175.3 basis points this quarter, according to data provider CMA.
The Markit iTraxx Japan index was little changed at 187 basis points as of 9:22 a.m. in Tokyo, Deutsche Bank AG prices show. The benchmark has traded between 184.2 basis points and 207 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.
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 email@example.com