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 declined, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 128 basis points as of 9:07 a.m. in Hong Kong, Deutsche Bank AG prices show. The benchmark has plunged 24.4 basis points this month, according to Deutsche Bank and data provider CMA.

The Markit iTraxx Japan index fell 2 basis points to 90.5 basis points as of 9:09 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark is set for the lowest close since May 28, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia index declined 4 basis points to 115 basis points as of 9:43 a.m. in Sydney, National Australia Bank Ltd. prices show. The gauge has fallen 34.5 points from its highest level this year reached on June 24, 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: Paulina Duran in Sydney at pduran10@bloomberg.net

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

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