Asia-Pacific Bond Risk Little Changed, Credit-Default Swaps Show

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan held at 110.5 basis points as of 8:08 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge last closed at a lower level on Jan. 29, according to data provider CMA.

The Markit iTraxx Australia index was at 112.5 as of 11:07 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark closed at the same level yesterday, the lowest since Jan. 10, 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 climbed 1.5 basis points to 121.5 basis points as of 9:17 a.m. in Tokyo, according to Citigroup Inc. prices.

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

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