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

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

The Markit iTraxx Japan index fell three basis points to 124 basis points as of 9:06 a.m. in Tokyo, according to Deutsche Bank AG prices. Japan’s financial markets were closed yesterday for a national holiday.

The Markit iTraxx Australia index climbed half a basis point to 116.5 as of 11:09 a.m. in Sydney, according to Westpac Banking Corp. The benchmark yesterday closed at its lowest level since Jan. 28, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Markets in Hong Kong and Singapore are shut today for lunar new year celebrations.

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: Benjamin Purvis in Sydney at bpurvis@bloomberg.net

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