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

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

The Markit iTraxx Australia index slid 1.5 basis points to 109.5 basis points as of 11:11 a.m. in Sydney, according to Deutsche Bank AG. The index 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 declined 4 basis points to 135 as of 8:35 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. (ANZ) prices show. The gauge is set for its lowest close since Sept. 10, 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 84.5 basis points as of 9:38 a.m. in Tokyo, Citigroup Inc. prices show. The index is on track for its lowest close since May 23, 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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