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 2 basis points to 115 basis points as of 10:25 a.m. in Sydney, according to Westpac Banking Corp. prices. The measure, which has ranged from 102.3 to 127.5 this year, is poised to close at its highest level since April 8, according to data provider CMA.

The Markit iTraxx Japan index advanced 2 basis points to 94 as of 9:29 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark is set to pare its decline to 19 basis points so far this month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 114.5 basis points as of 8:22 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set to rise for a fifth consecutive day, CMA data 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: Foster Wong in Hong Kong at fwong94@bloomberg.net

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net

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