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

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

The Markit iTraxx Australia index fell 4.5 basis points to 147 basis points as of 11:25 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The measure is heading for its first decline in a week, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid four basis points to 126 as of 8:29 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark is set for its lowest close in a 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 fell two to 188 as of 9:24 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is on track for its lowest close in two months, according to CMA.

The 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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