Asia-Pacific Bond Risk Little Changed, Credit-Default Swaps Show

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan held at 141 basis points as of 8:18 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge jumped yesterday to its highest close since Sept. 26, according to data provider CMA.

The Markit iTraxx Australia index was little changed at 130 basis points as of 10:19 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. It closed at 128.5 basis points yesterday, the highest level since December, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index remained unchanged at 101 basis points as of 10:10 a.m. in Tokyo, according to Citigroup Inc.

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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