The cost of insuring corporate and sovereign bonds in Asia from non-payment fell to a more than 17-month low, according to traders of credit-default swaps and data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 0.5 basis point to 109 basis points as of 9:08 a.m. in Hong Kong, Credit Agricole SA prices show. The measure is set for its lowest close since July 2011, according to CMA.
The Markit iTraxx Australia index declined 2 basis points to 122 as of 12:07 p.m. in Sydney, according to Westpac Banking Corp. The benchmark is on course for its lowest since August last year, 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 dropped one to 161.25 as of 10:26 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is set for its lowest close since April 6, 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.