Asia-Pacific Bond Risk Falls, Credit-Default Swap Prices ShowBenjamin Purvis
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment declined, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 2.5 basis points to 118 basis points as of 8:22 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its lowest close since March 25, according to data provider CMA.
The Markit iTraxx Japan index declined 1.5 basis points to 89 basis points as of 9:18 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark last closed lower in April 2010, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index slid 2 basis points to 115 basis points as of 10:55 a.m. in Sydney, according to National Australia Bank Ltd. prices. The measure is on track for its lowest close since the current series of the index started trading on March 20, 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.