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 today, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell one basis point to 158.5 basis points as of 8:26 a.m. in Singapore, Westpac Banking Corp. (WBC) prices show. The gauge rose 16.9 last month, the most since June, according to data provider CMA.

The Markit iTraxx Australia index dropped one basis point to 122 as of 10:07 a.m. in Sydney, according to Deutsche Bank AG prices. The benchmark, which rose 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 fell 1.5 basis points to 90.8 as of 9:07 a.m. in Tokyo, according to Citigroup Inc. prices. The measure is set for its lowest close since May 28, 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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