Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment increased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 1 basis point to 108.5 basis points as of 8:26 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge, which has ranged from 102.8 to 120.3 since Dec. 31, is poised to decline for a fourth-consecutive week, according to data provider CMA.
The Markit iTraxx Australia index rose half a basis point to 115 as of 10:38 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark is set to rise for the first time in three days, 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 also increased half a basis point to 125 basis points as of 9:13 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure, which started the year at 148.1, declined for a fifth straight month in February, 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.
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