Asia-Pacific Bond Risk Declines, 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 2 basis points to 162 basis points as of 8:59 a.m. in Singapore, Australia & New Zealand Banking Group Ltd. (ANZ) prices show. The gauge rose 16.9 basis points last month, the most since June, according to data provider CMA.

The Markit iTraxx Australia index decreased 1 basis point to 124 as of 10:57 a.m. in Sydney, according to ANZ prices. The measure, which advanced 1.2 basis points last month, is poised for its lowest close since Aug. 26, 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 declined 0.5 of a basis point to 94 basis points as of 9:36 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge is poised for its lowest close since Aug. 15, 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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