The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 161.5 basis points as of 8:37 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is on course to close at its lowest level since April 5, according to data provider CMA.
The Markit iTraxx Australia index dropped 7.5 basis points to 153.5 as of 10:08 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is on track for its biggest one-day decline since Jan. 19 and has traded between 182.8 and 128.2 this year, 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 decreased 4 basis points to 169 basis points as of 9:17 a.m. in Tokyo, Deutsche Bank AG prices show. The measure has traded between 194.6 and 136.2 this year, CMA prices show.
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. A basis point is 0.01 percentage point.