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 rose, according to traders of credit-default swaps.

The Markit iTraxx Australia index increased 3.5 basis points to 121.5 basis points as of 11:05 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The measure, which rolled to a new series on March 20, is set for its highest close since Feb. 4, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan gained 2 basis points to 120 as of 8:00 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark, which has ranged from 100.5 to 120.8 since Dec. 31, is set for its highest close since March 22, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index climbed 2 basis points to 109 as of 8:55 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge has ranged from 101 to 148.1 this year, according to CMA.

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

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