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Japan Corporate Bond Risk Drops, Credit-Default Swap Prices Show

The cost of insuring corporate bonds in Japan from non-payment fell, according to traders of credit- default swaps.

The Markit iTraxx Japan index decreased 1 basis point to 226 basis points as of 9:06 a.m. in Tokyo, Deutsche Bank AG prices show. The index has ranged from 136.2 and 229.5 this year, according to data provider CMA.

The Markit iTraxx Australia index was little changed at 159 basis points as of 10:08 a.m. in Sydney, according to Westpac Banking Corp. The gauge has ranged from 128.2 and 211.1 this year, according to data provider CMA, which is owned by McGraw- Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was also little changed at 136.5 basis points as of 8:07 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices 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: Tanya Angerer in Singapore at tangerer@bloomberg.net

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

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