The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment surged, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 5 basis points to 158 basis points as of 8:43 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its highest close since Aug. 2 and biggest daily rise since July 23, set to pare its decline for the month to 1, according to data provider CMA.
The Markit iTraxx Australia index jumped 9 basis points to 172 basis points as of 10:25 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark is poised for the biggest daily gain since July 23 and the highest close since July 27, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. It is set to rise 5.3 basis point this month, the first monthly increase since May, the data show.
The Markit iTraxx Japan index advanced 5 basis points to 213 basis points as of 9:26 a.m. in Tokyo, Deutsche Bank AG prices show. The measure is set to close at its highest level since May 21 and for a 28 basis-point advance this month, the biggest monthly rise since April, 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.