The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed three basis points to 212 basis points as of 8:34 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since Nov. 29, according to data provider CMA.
The Markit iTraxx Australia index rose one basis point to 195 basis points as of 11:12 a.m. in Sydney, according to Westpac Banking Corp. The index is also headed for its highest close since Nov. 29 according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index increased two basis points to 190 as of 9:21 a.m. in Tokyo, Citigroup Inc. 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.