Asia-Pacific Bond Risk Falls, Credit-Default Swap Prices Show

The cost of insuring Asia-Pacific corporate and sovereign bonds from default declined, according to traders of credit-default swaps.

The Markit iTraxx Australia index dropped 6 basis points to 138 basis points as of 11:10 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. The gauge is on course for its lowest close since Sept. 19, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 to 117.5 as of 8:20 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The measure is also set for its lowest close since Sept. 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index slid 6 basis points to 212 as of 9:08 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is on track for the lowest close since Sept. 21, 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.

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