Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show
The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region rose, according to traders of credit-default swaps.
The Markit iTraxx Australia index increased 4 1/2 basis points to 151 basis points as of 11:31 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The index is set for its highest close since Oct. 11, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose three basis points to 126 as of 8:26 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index has ranged between 175.3 and 112.6 in the second half of the year, CMA data show.
The Markit iTraxx Japan index climbed two basis points to 206 as of 9:12 a.m. in Tokyo, Deutsche Bank AG prices show. The index had risen 19.9 basis points this year as of yesterday’s close after increasing 85.5 in 2011, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The 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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