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 Asia index of 40 investment-grade borrowers outside Japan dropped half a basis point to 129.5 as of 8:08 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is set to end the week down six basis points at its lowest level since Sept. 19, after dropping for a seventh straight day, according to data provider CMA.

The Markit iTraxx Australia index declined one basis point to 154 as of 10:12 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The measure is on course for its lowest close since Sept. 21, decreasing five basis points this week, 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 was little changed at 223 basis points as of 9:21 a.m. in Tokyo, down one basis point since Sept. 28, Deutsche Bank AG 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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