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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 4 basis points to 128 basis points as of 8:44 a.m. in Hong Kong, Westpac Banking Corp. (WBC) prices show. The gauge is set for its lowest close since June 5, according to data provider CMA.

The Markit iTraxx Australia index lost 2 basis points to 117 basis points as of 10:24 a.m. in Sydney, according to National Australia Bank Ltd. The index is on course for its lowest close since June 4, 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 1 basis point to 90 as of 9:23 a.m. in Tokyo, Deutsche Bank AG prices show. The index is on track for its lowest close since May 28, according to CMA.

Credit-default swap indexes are benchmarks for protecting 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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