The cost of insuring corporate and sovereign bonds in Asia from non-payment rose after dipping to the lowest in 19 months yesterday, according to prices from credit-default swap traders and data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 108 basis points as of 8:44 a.m. in Hong Kong, according to Credit Agricole SA. The index closed at 107 yesterday, its least since May 2011, CMA prices show.
The Markit iTraxx Australia index increased 0.5 of a basis point to 121 as of 11:44 a.m in Sydney, Credit Agricole prices show. The index closed at 120.2 basis points on Dec. 18, its lowest since August last year, 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 rose 2.5 basis points to 159 basis points as of 9:34 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge, which has ranged from 136.2 basis points to 229.5 basis points this year, closed at 157.4 yesterday, its least since April, CMA 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.