Japan Corporate Bond Risk Rises, Credit-Default Swap Prices Show

The cost of insuring Japanese corporate bonds from non-payment increased, according to traders of credit-default swaps.

The Markit iTraxx Japan index gained 1 basis point to 92 basis points as of 9:28 a.m. in Tokyo, Deutsche Bank AG prices show. The index is on track for its highest close since July 12, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 137.5 basis points as of 8:32 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge has ranged from 136.6 basis points to 163 basis points this month, 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 was also little changed at 126 basis points as of 10:29 a.m. in Sydney, according to National Australia Bank Ltd. The index has ranged from 125.5 to 139.8 this month, 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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.