Asia-Pacific Bond Risk Drops, Credit-Default Swap Prices Show
The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region fell, according to traders of credit-default swaps.
The Markit iTraxx Australia index decreased 1.5 basis points to 96.25 basis points as of 10:24 a.m. in Sydney, according to Westpac Banking Corp. prices. The measure is down 9.7 basis points this month and is trading at levels last seen in November 2010, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 100 as of 8:16 a.m. in Singapore, Westpac prices show. The benchmark, which has ranged from 99.9 basis points to 122.3 basis points this year, has has fallen 7.5 basis points in May, 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 2 basis points to 77 basis points as of 9:26 a.m. in Tokyo, according to Deutsche Bank AG prices. The gauge is on track for its lowest close since May 21, 2008, according to CMA.
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.
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