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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 152 as of 8:29 a.m. in Hong Kong, Royal Bank of Scotland Group Plc. prices show. The gauge is poised for its highest close since Aug. 3, according to data provider CMA. It is down from 159 on July 31.

The Markit iTraxx Japan index rose 1 basis point to 201 as of 9:19 a.m. in Tokyo, Deutsche Bank AG prices show. The measure was up about 16 basis points this month and is set for its highest close since Aug. 7, 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 1 basis point to 160 as of 10:14 a.m. in Sydney, National Australia Bank Ltd. (NAB) prices show. The benchmark has jumped 12 basis points in the past week and has traded between 148 and 168 this month, 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: Taejin Park in Seoul at tpark31@bloomberg.net

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

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