Japan, Australia Bond Risk Falls, Swap Prices Show

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

The Markit iTraxx Japan index fell 0.5 of a basis point to 82.5 basis points as of 8:25 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark has tumbled 76.5 basis points this year and is trading at lows last seen in May 2008, according to Citigroup and data provider CMA.

The Markit iTraxx Australia index declined 1.25 basis points to 104.25 as of 9:00 a.m. in Sydney, according to Westpac Banking Corp. The gauge ranged from 105.9 basis points to 123.1 in April, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Markets in Hong Kong and Singapore 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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