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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 5 basis points to 155 basis points as of 8:27 a.m. in Hong Kong, Standard Chartered Plc prices show. The benchmark is set for its highest close since Sept. 4, according to data provider CMA.

The Markit iTraxx Australia index added 5 basis points to 125 as of 10:04 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The measure is poised for its highest level since Aug. 28, according to data from CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index rose 2 basis points to 94.5 as of 9:07 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge is set for its biggest increase since Sept. 24, CMA data show.

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: Tanya Angerer in Singapore at tangerer@bloomberg.net

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

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