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

The cost of insuring corporate bonds from non-payment in the Asia-Pacific region rose, headed for a second weekly increase, according to credit-default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 149 as of 8:26 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for the biggest daily gain since Aug. 13, and second consecutive weekly increase, according to data provider CMA.

The Markit iTraxx Japan index rose 2 basis points to 199 as of 9:24 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is set to advance 13.5 basis points from Aug. 17, heading for the first weekly increase in three, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index climbed 3 basis points to 156 as of 11:22 a.m. in Sydney, Credit Agricole SA prices show. The gauge has rebounded from 148.3 basis points on Aug. 21, the lowest since April 4, 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: Wendy Mock in Hong Kong at wmock3@bloomberg.net

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

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