Japan Corporate Bond Risk Falls, Credit-Default Swap Prices Show

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

The Markit iTraxx Japan index decreased one basis point to 159 basis points as of 9:41 a.m. in Tokyo, Deutsche Bank AG prices show. The measure declined to 157.4 basis points on Dec. 19, the least since April, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Markets are closed today in Australia, Hong Kong and Singapore for holidays.

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 the reporter on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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

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