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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 2 basis points to 149 as of 8:21 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is headed for its first weekly decline since the five days ending Aug. 10, according to data provider CMA. It ended last week at 153 basis points, CMA prices show.

The Markit iTraxx Australia index fell 3.5 basis points to 164.5 as of 10:14 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The index, which has ranged from 128 to 211 basis points this year, is set for its lowest close since Aug. 29, 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 declined 1 basis point to 210 as of 9:13 a.m. in Tokyo, Citigroup Inc. prices show. The measure is about seven basis points below a peak this year of 217 on May 18, CMA data show.

Credit-default swap indexes are benchmarks for protecting 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: Rachel Evans in Hong Kong at revans43@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.