Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices ShowFoster Wong
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 2 basis points to 106 basis points as of 11:18 a.m. in Sydney, according to Westpac Banking Corp. prices. The gauge is headed for its first rise in eight business days after closing yesterday at its lowest since May 2011, according to data provider CMA.
The Markit iTraxx Japan index advanced 0.5 of a basis point to 99.75 as of 9:11 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark, which reached a high this year of 148.1 basis points on Jan. 4, is set for its first increase since Feb. 26, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 103 basis points as of 8:15 a.m. in Hong Kong, according to Australia & New Zealand Banking Group Ltd. prices. The measure is headed for its highest close since March 7, CMA data 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.