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

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

The Markit iTraxx Australia index decreased 3.5 basis points to 114 basis points as of 10:29 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark, which has ranged from 110.2 basis points to 127.5 this year, is set to decline 5.5 basis points this month, data provider CMA prices show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 107 as of 8:36 a.m. in Hong Kong, Royal Bank of Scotland Plc prices show. The gauge, which has ranged from 102.8 to 120.3 since Dec. 31, is on course to decline 9.2 basis points in February, 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 2 basis points to 125 basis points as of 9:11 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure, which started the year at 148.1, is poised for a 10.2 basis-point decline this month, 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.