Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment increased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 5 basis points to 179 basis points as of 8:31 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The gauge is headed for the highest close since June 28, according to data provider CMA.
The Markit iTraxx Australia index gained 3 basis points to 187 basis points as of 10:17 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark is also poised to rise to the highest level since June 28, 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 rose 3 basis points to 189 basis points as of 9:29 a.m. in Tokyo, Citigroup Inc. prices show. The index is set to reach the highest level since June 8, 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.
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