Australia and Japan Bond Risk Falls, Credit-Default Swaps Show

The cost of insuring corporate bonds in Australia and Japan against non-payment declined, according to traders of credit-default swaps.

The Markit iTraxx Australia index slid 3 basis points to 121 basis points as of 10:21 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The measure climbed for the past two months, closing yesterday at the 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 fell 2 basis points to 95.5 as of 9:11 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge, which rose 2.5 basis points last month, closed lower for the fourth straight quarter yesterday, CMA data show.

Financial markets in Hong Kong are closed today for a public holiday.

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

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