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

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment dropped, according to credit-default swap traders.

The Markit iTraxx Japan index declined 1.5 basis points to 136.5 basis points as of 9:21 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure is set for its lowest close since March 19, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan retreated one basis point to 106 as of 8:29 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The benchmark, which has ranged from 102.8 to 110.1 this year, is poised for its lowest close since Jan. 14, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia index dropped one basis point to 114 as of 10:35 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. prices. The gauge is also set for its lowest close since Jan. 14, 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.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.