CDS Australia and Asia

The cost of insuring corporate bonds in Australia against non-payment fell, according to traders of credit-default swaps.

The Markit iTraxx Australia index declined 1 basis point to 110 basis points as of 10:43 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The benchmark is headed for a 13 basis-point drop this month and has fallen 17.5 basis points this year according to Westpac and data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was unchanged at 111.5 as of 8:32 a.m. in Hong Kong, Royal Bank of Scotland Group Plc (RBS) prices show. The gauge has ranged from 100.5 basis points to 122.3 basis points since Dec. 31, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Markets in Japan are closed today for a public holiday.

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: Paulina Duran in Sydney at pduran10@bloomberg.net

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

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