Asia Bond Risk Set for Biggest Weekly Increase Since September

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed by 1 basis point to 138 basis points as of 8:18 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for a 5 basis-point increase over the past five days and is poised for its biggest weekly gain since the period ended Sept. 27, according to data provider CMA.

The Markit iTraxx Japan index increased 0.5 of a basis point to 93.75 as of 9:19 a.m. in Tokyo, according to Citigroup Inc. prices. The measure is on track to record its first weekly decline since the five days ended Oct. 18, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia index was little changed at 104 basis points as of 11:20 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark has fallen for the past two days after peaking at 106 basis points on Nov. 5, the highest since Oct. 28, 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: Benjamin Purvis in Sydney at bpurvis@bloomberg.net

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

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