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

The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment declined, according to traders of credit-default swaps.

The Markit iTraxx Australia index slid 3 basis points to 110 basis points as of 10:43 a.m. in Sydney, according to National Australia Bank Ltd. The gauge is on course for its lowest close since May 29, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 5 basis points to 135 as of 8:26 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark, which has fallen 18 basis points in the three trading days through yesterday, is set to close at its lowest level since Aug. 14, 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 retreated 1 basis point to 87 as of 9:24 a.m. in Tokyo, Deutsche Bank AG prices show. The measure last closed lower on May 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: Rachel Evans in Hong Kong at revans43@bloomberg.net

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

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