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

The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment fell, according to traders of credit-default swaps.

The Markit iTraxx Australia index slipped 0.5 basis point to 97.5 basis points as of 10:15 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The measure is on course for the lowest close since Nov. 5, 2010, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 101 as of 8:17 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The benchmark has fallen 6.5 this month, 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 dropped 6 basis points to 80 as of 9:15 a.m. in Tokyo, according to Deutsche Bank AG prices. The drop is the biggest since April 5, putting the gauge on track for the lowest close since May 2008, according to CMA. Japanese markets were closed May 3 through May 6 for public holidays.

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: Jun Yang in Hong Kong at jyang180@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.