The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment declined, according to credit-default swap traders.
The Markit iTraxx Japan index dropped 8 basis points to 202 basis points as of 9:14 a.m. in Tokyo, Deutsche Bank AG prices show. That’s on course for its biggest daily decline since Oct. 28, according to data provider CMA, which is owned by CME Group Inc., and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index fell 5 basis points to 212 as of 11:16 a.m. in Sydney, according to Westpac Banking Corp. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 224 as of 8:31 a.m. in Singapore, Royal Bank of Scotland Group Plc 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.