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 fell, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 126.5 basis points as of 9:22 a.m. in Hong Kong, Westpac Banking Corp. (WBC) prices show. The gauge has declined 51.3 basis points from its highest level this year reached on June 24, and is heading for the lowest close since June 5, according to data provider CMA.

The Markit iTraxx Australia index dropped 3 to 113 as of 10:05 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark has plunged 36.5 from its 2013 peak last month, 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 was unchanged at 92 basis points as of 8:48 a.m. in Tokyo, Citigroup Inc. prices 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: 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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