Asia-Pacific Bond Risk Falls, Credit-Default Swap Prices Show
The cost of insuring Asia-Pacific corporate and sovereign bonds from default dropped, according to traders of credit-default swaps.
The Markit iTraxx Japan index decreased 4 basis points to 142.5 as of 9:12 a.m. in Tokyo, Citigroup Inc. prices show. It would be the lowest level since March 5, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 3 basis points to 163.5 basis points as of 8:42 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for the lowest close since March 5, according to CMA.
The Markit iTraxx Australia index slid 5 basis points to 146 basis points as of 11:13 a.m. in Sydney, according to Deutsche Bank AG.
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.
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