Cost of Insuring Japan Corporate Bonds Drops, 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 basis points as of 9:39 a.m. in Tokyo, Citigroup Inc. prices show. The measure is poised for a 10.7 basis-point decrease this month, after declines of 12 and 6.6 basis points in November and October respectively, according to data provider CMA. A basis point is 0.01 percentage point.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 124 basis points as of 9:13 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The gauge is set to fall 7 basis points this month after gaining 1 basis point in November, according to CMA. Year-to-date the measure is up 10.7 basis points, the data show.

Markets are closed in Australia and Hong Kong 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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