The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit-default swaps.
The Markit iTraxx Australia index advanced 6 basis points to 169 basis points as of 10:01 a.m. in Sydney, Credit Agricole CIB prices show. That’s on course for its highest since July 22, 2009, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan climbed 5 basis points to 159 basis points as of 8:01 a.m. in Hong Kong, according to Credit Agricole prices. The risk benchmark is headed for its highest close since May 25, 2010, according to CMA prices in New York.
The Markit iTraxx Japan index rose 3 basis points to 143 basis points as of 8:59 a.m. in Tokyo, Deutsche Bank AG prices show. Five-year swaps on Japan’s sovereign debt climbed 2 basis points to 108, Deutsche Bank prices show.
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. A basis point is 0.01 percentage point.