Cost of Insuring Japan Corporate Bonds Falls, Default Swaps Show

The cost of insuring corporate bonds from non-payment in Japan fell, according to credit-default swap traders.

The Markit iTraxx Japan index dropped half a basis point to 68.5 basis points as of 9:39 a.m. in Tokyo, Citigroup Inc. prices show. The measure is poised for a 10.2 basis-point drop this month, after declines of 12 basis points and 6.6 basis points in November and October respectively, according to data provider CMA. A basis point is 0.01 percentage point.

Markets are closed in Australia, Hong Kong and Singapore today for holidays.

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.

— With assistance by Judy Chen

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