Japan Corporate Bond Risk Falls, Credit-Default Swaps Show

The cost of insuring corporate bonds in Japan from non-payment fell, according to traders of credit- default swaps.

The Markit iTraxx Japan index retreated 2.5 basis points to 161 basis points as of 10:00 a.m. in Tokyo, Citigroup Inc. prices show. The gauge has slid nine basis points over the past week, according to prices from Citigroup and data provider CMA.

The Markit iTraxx Australia index declined of a 0.5 basis point to 123.5 as of 11:23 a.m in Sydney, according to Westpac Banking Corp. The measure has dropped five basis points over the past week, according to Westpac and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 109 basis points as of 08:24 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.

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.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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