Asia-Pacific Bond Risk Climbs, Credit-Default Swap Prices Show
The cost of insuring Asia-Pacific corporate and sovereign bonds from default rose, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 3 basis points to 153 basis points as of 8:33 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since Oct. 2, according to data provider CMA.
The Markit iTraxx Australia index advanced 1 basis point to 123 basis points as of 11:25 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The benchmark is poised for its highest level since Oct. 1, 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 1 basis point to 96.5 as of 9:33 a.m. in Tokyo, Deutsche Bank AG prices show. The measure is on track for its highest close since Sept. 30, according to CMA.
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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