Australian Corporate Bond Risk Rises, Credit-Default Swaps Show
The cost of insuring corporate bonds in Australia against non-payment increased, according to traders of credit-default swaps.
The Markit iTraxx Australia index rose 1 basis point to 106.5 as of 11:24 a.m. in Sydney, according to National Australia Bank Ltd. prices. The gauge has fallen from 125.2 at the end of September and is poised for its first monthly decline since July, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 133 basis points as of 8:25 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark has slipped from 156.4 basis points on Sept. 30 and is set for a second monthly drop, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Japan index was little changed at 87.25 basis points as of 9:26 a.m. in Tokyo, according to Citigroup Inc. prices. The measure has fallen from 97.3 at the end of September and is on track for its largest monthly drop since April, 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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