Bond Risk in Asia Increases, Credit-Default Swap Prices Show

The cost of insuring corporate and sovereign bonds against non-payment in Asia rose, credit-default swaps show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 3 basis points to 135 basis points as of 8:18 a.m. in Singapore, Westpac Banking Corp. (WBC) prices show. The benchmark slid the most in nine months on June 14, according to data provider CMA.

The Markit iTraxx Japan index increased 2 basis points to 109.5 as of 9:21 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge rose for five consecutive weeks through June 14, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index declined 3 basis points to 129 basis points as of 10:20 a.m. in Sydney, according to National Australia Bank Ltd. prices. The measure is set for its second straight daily fall, CMA prices show.

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: Jun Yang in Hong Kong at jyang180@bloomberg.net

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

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