Asia-Pacific Bond Risk Falls, Credit-Default Swaps Show
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment fell, according to traders of credit-default swaps.
The Markit iTraxx Japan index dropped 2 basis points to 81 basis points as of 9:04 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark has tumbled 78 basis points this year and is poised to close at its lowest level since May 2008, according to Citigroup and data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 3 basis points to 107 as of 9:00 a.m. in Hong Kong, Deutsche Bank AG prices show. The gauge is set to decline 15.3 basis points this month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index declined 3 basis points to 104 basis points as of 9:37 a.m. in Sydney, National Australia Bank Ltd. prices show. The gauge, which has ranged from 102.3 to 127.5 since Dec. 31, is on track for its lowest close since March 15, 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.
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