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

The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region fell, according to traders of credit-default swaps.

The Markit iTraxx Australia index dropped two basis points to 117 basis points as of 11:26 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark is set to extend its decline this year to 10.5 basis points, after retreating for a fifth straight month in January, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased two basis points to 113 as of 8:26 a.m. in Hong Kong, Westpac prices show. The gauge climbed 2.8 basis points in January, rising for a second consecutive month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index fell one basis point to 128 basis points as of 9:28 a.m. in Tokyo, according to Citigroup Inc. prices. The measure is headed for its lowest level since August 2011, 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: Tanya Angerer in Singapore at tangerer@bloomberg.net

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

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.