The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment fell, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 4 basis points to 206 basis points as of 8:57 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its biggest daily drop since May 28 and its lowest close since May 31, according to data provider CMA.
The Markit iTraxx Australia index fell 2 basis points to 208 as of 10:59 a.m. in Sydney, according to Westpac Banking Corp. The index is on course for its biggest decrease since May 28, having risen 27.5 basis points 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 declined 2 basis points to 200 basis points as of 9:57 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.