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

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

The Markit iTraxx Japan index dropped 4 basis points to 219 as of 9:11 a.m. in Tokyo, Citigroup Inc. prices show. The gauge is on track for the lowest close since Sept. 24, according to data provider CMA.

The Markit iTraxx Australia index declined 2 basis points to 154 as of 10:12 a.m. in Sydney, according to Westpac Banking Corp. The measure is on course for the lowest close since Sept. 21, according to CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 1 to 131 as of 8:13 a.m. in Hong Kong, Credit Agricole SA prices show. The benchmark is poised for its lowest close since Sept. 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

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