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Bond Risk Increases in Asia, Credit-Default Swap Prices Show

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

The Markit iTraxx Japan index climbed 5 basis points to 207 basis points as of 9:07 a.m. in Tokyo, Deutsche Bank AG prices show. The benchmark, which ranged from 203 basis points to 227.5 in October, is set for its highest close since Oct. 29, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 1 basis point to 119 as of 8:06 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is on track for its highest close since Oct. 30 after ranging between 114.4 and 134.6 last month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index was little changed at 142.5 basis points as of 11:10 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The measure fell 20 basis points in October, its biggest decline since January, according to CMA.

Credit-default swap indexes are benchmarks for insuring 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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