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

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

The Markit iTraxx Japan index fell 1.5 basis points to 92.25 basis points as of 9:17 a.m. in Tokyo, Citigroup Inc. prices show. The measure is poised for its lowest close since Oct. 31, according to data provider CMA.

The Markit iTraxx Australia index decreased 1 basis point to 104.5 points as of 11:16 a.m. in Sydney, according to National Australia Bank Ltd. The benchmark rose 0.6 basis point last week, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 138 basis points as of 8:40 a.m. in Singapore, Standard Chartered Plc prices show. The gauge declined for the past four business days, 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: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

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

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