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 Australia index rose 5 basis points to 123 basis points as of 11:08 a.m. in Sydney, National Australia Bank Ltd. prices show. The measure, which rolled to a new series on March 20, is set to snap six months of declines with an 8.8- basis-point jump, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 121.5 as of 8:49 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark is headed for an 8.2-basis-point increase this quarter, its first since the period to June 30, 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 increased 2 to 111 as of 9:23 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge has fallen 13.7 basis points so far in March, set to decline for the sixth straight month, 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: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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

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