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

The cost of insuring Asia-Pacific corporate and sovereign bonds from default declined, according to traders of credit-default swaps.

The Markit iTraxx Australia index slid 1.5 basis points to 109.5 basis points as of 10:59 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The gauge is on course for its lowest close since March 19, according to data provider CMA. Markets in Australia were closed yesterday for a public holiday.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan retreated 1 to 111 as of 8:25 a.m. in Hong Kong, Royal Bank of Scotland Group Plc (RBS) prices show. The benchmark is also set for its lowest close since March 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index was little changed at 86 basis points as of 9:36 a.m. in Tokyo, Citigroup Inc. prices show. The last time the measure closed lower was in April 2010, according to CMA.

Credit-default swap indexes are benchmarks for protecting 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: Rachel Evans in Hong Kong at revans43@bloomberg.net

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