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

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment increased for the first time in three days, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 161 basis points as of 8:26 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for its first increase since Aug. 22 after falling from a two-month high, according to data provider CMA.

The Markit iTraxx Japan index rose 1 basis point to 96 as of 9:19 a.m. in Tokyo, according to Citigroup Inc. prices. The measure, which has ranged from 90.9 to 110.2 this quarter, is also on course for its first rise in three days, 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 increased 1 basis point to 122 basis points as of 10:20 a.m. in Sydney, according to National Australia Bank Ltd. prices. The benchmark, also headed for its first rise since Aug. 22, is set to climb the most in a week, CMA data show.

Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. An increase signals improving perceptions of creditworthiness, while a drop 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: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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

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