Australian Bond Risk Advances, Credit-Default Swap Prices Show

The cost of insuring Australian corporate bonds from non-payment rose, according to traders of credit-default swaps.

The Markit iTraxx Australia index climbed 1 basis point to 97 basis points as of 11:24 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is poised for a 3.25 basis points retreat in December and a 30.5 basis points decrease for 2013, its second year of decline, CMA data show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 127 basis points as of 8:20 a.m. in Singapore, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is set to fall 4 basis points this month, paring its advance for the year to 13.65 basis points, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market. A basis point is 0.01 percentage point.

Markets in Japan are closed for a public holiday. The price of insuring against default in Asia’s second-largest economy dropped 91 basis points this year to 67.81 basis points, CMA data shows. The gauge closed at its lowest since May 2008 on Dec. 26.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.