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

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

The Markit iTraxx Japan index dropped 3 basis points to 222 basis points as of 9:15 a.m. in Tokyo, Westpac Banking Corp. (WBC) prices show. The gauge is on track for its lowest close since Sept. 27, according to data provider CMA.

The Markit iTraxx Australia index fell 2 basis points, or 0.02 percentage point, to 156 as of 10:11 a.m. in Sydney, according to Westpac Banking. The measure is set for its lowest close since Sept. 21, according to 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 decreased 1 basis point to 133.5 as of 9:14 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark is also headed for its lowest close since Sept. 21, according to CMA.

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.

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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