The cost of insuring Asia-Pacific sovereign and corporate bonds from non-payment rose, with Australia’s contracts poised for the biggest increase in almost three weeks, according to traders of credit-default swaps.
The Markit iTraxx Australia index rose 3 basis points to 142 basis points as of 11:16 a.m. in Sydney, Westpac Banking Corp. prices show. That would be the biggest advance since Feb. 10, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. The measure is up from a six-month low of 139.8 Feb. 8.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 3 basis points to 160.5 basis points as of 8:28 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc prices. The index has increased from a five-month low of 157.9 on Feb. 9.
The Markit iTraxx Japan index rose 2.5 basis points to 139.5 basis points as of 9:15 a.m. in Tokyo, according to Deutsche Bank AG prices. Japan’s contracts fell to 137 on Feb. 24, the lowest since Aug. 18.
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.