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

Jan. 9 (Bloomberg) -- The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment increased, according to traders of credit-default swaps.

The Markit iTraxx Australia index rose 1 basis point to 113 basis points as of 11:08 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. The index is on course for its highest close since Jan. 4, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan gained 1 basis point to 104.5 as of 8:18 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since Jan. 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index climbed 1 1/2 basis points to 143 basis points as of 9:09 a.m. in Tokyo, Citigroup Inc. prices show. The index is on track for its first increase this year, according to CMA.

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.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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