Asia-Pacific Bond Risk Decreases, Credit-Default Swaps ShowJun Yang
The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region fell, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped two basis points to 115 basis points as of 9:40 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge climbed 2.8 basis points in January, rising for a second consecutive month, according to data provider CMA.
The Markit iTraxx Australia index dropped three basis points to 119 as of 11:08 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark is poised for its lowest close in three days, after declining for a fifth straight month in January, 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 fell one basis point to 134 as of 10:09 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure is headed for its lowest level since August 2011, 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.