Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show
The cost of insuring Asia-Pacific corporate and sovereign bonds from default rose, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 1 basis point to 125.5 basis points as of 8:12 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge, which has traded between 112.6 basis points and 175.3 since June 30, is set for the highest close since Oct. 15, according to CMA.
The Markit iTraxx Australia index increased 1 to 147 as of 11:35 a.m. in Sydney, according to Westpac Banking Corp. The measure has traded between 132.4 basis points and 186 in the second half, 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 Japan index fell 0.5 to 206.5 as of 9:11 a.m. in Tokyo, Deutsche Bank AG prices show. The benchmark, which has traded between 168.5 basis points and 229.5 since June 30, is on track for its lowest close since Oct. 25, 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. A basis point is 0.01 percentage point.
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