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

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment decreased, according to credit-default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 4 basis points to 156.5 basis points as of 8:25 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. (ANZ) prices show. The measure, which closed at 152.4 last quarter, is down from a one-year high of 177.8 on June 24, according to data provider CMA.

The Markit iTraxx Australia index fell 2 basis points to 131 as of 10:26 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The benchmark is set for its lowest close since June 19, 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 dropped 1.5 basis points to 100.5 as of 9:20 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge is poised for its lowest level since June 12, CMA data 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: Foster Wong in Hong Kong at fwong94@bloomberg.net

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

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