The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment increased, with the Asia and Australia indexes set for their biggest monthly gains since September, according to traders of credit-default swaps.
The Markit iTraxx Australia index jumped 7 basis points to 205 basis points as of 10:41 a.m. in Sydney, according to Westpac Banking Corp. The gauge is poised for its highest close since Nov. 29 and a monthly increase of 50 basis points, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 8 basis points to 203 as of 8:46 a.m. in Hong Kong, Credit Agricole SA prices show. The index is headed for its highest close since Jan. 16 and a gain of 38 basis points since April 30, 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 added 4 basis points to 197 as of 9:42 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark reached 217.3 basis points on May 18, the highest since Oct. 5, according to CMA.
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.