Bond Risk Declines in Australia, Japan, Default Swap Prices ShowFoster Wong
The cost of insuring corporate bonds from non-payment fell in Australia and Japan, according to traders of credit-default swaps.
The Markit iTraxx Australia index dropped 2 basis points to 104 basis points as of 11:19 a.m. in Sydney, Westpac Banking Corp. prices show. The last time the gauge closed below that level was in May 2011, according to data provider CMA.
The Markit iTraxx Japan index decreased 0.5 of a basis points to 101.8 as of 9:23 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark had fallen 20.4 basis points this month through yesterday, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 101.5 basis points as of 9:04 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc prices. The measure is set for its lowest close since January 2011, 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.