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

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 2 basis points to 147 basis points as of 8:34 a.m. in Hong Kong, Westpac Banking Corp. (WBC) prices show. The gauge is set for its lowest close since Sept. 23, according to data provider CMA.

The Markit iTraxx Australia index fell about 2 basis points to 117 basis points as of 8:57 a.m. in Hong Kong, according to Australia & New Zealand Banking Group Ltd. (ANZ) The benchmark is on course for its lowest close since Sept. 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. Sydney is observing a public holiday.

The Markit iTraxx Japan index dropped 0.5 to 93.3 as of 9:28 a.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its lowest close since Oct. 3, according to CMA.

Credit-default swap indexes are benchmarks for protecting 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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