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

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment declined, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 10 basis points to 150 basis points as of 9:01 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. That pares the gauge’s advance to 33.6 basis points this month and 27.8 basis points this quarter, according to data provider CMA.

The Markit iTraxx Australia index retreated 6 basis points to 136 as of 10:39 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark is set for its lowest close since June 19, reducing its rise since May 31 to 23.6 basis points and its advance this quarter to 13, 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 fell 5.5 basis points to 112 basis points as of 9:43 a.m. in Tokyo, Citigroup Inc. prices show. The measure, which has increased 15.5 basis points in June, is down 1 basis point this quarter, 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.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

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

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