Australia Bond Risk Increases, Credit-Default Swap Prices ShowTanya Angerer
The cost of insuring Australian corporate bonds from non-payment rose, according to traders of credit-default swaps.
The Markit iTraxx Australia index climbed 0.5 basis point to 96 basis points as of 11:30 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is poised for a 4.25 basis point retreat in December, the fourth straight month of declines, according to CMA.
The Markit iTraxx Japan index was unchanged at 67.25 basis points as of 9:24 a.m. in Tokyo, Citigroup Inc. prices show. The measure reached its lowest close since May 2008 on Dec. 26, according to data provider 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 was little changed at 127.5 basis points as of 8:48 a.m. in Singapore, Mitsubishi UFJ Securities HK Ltd. prices show. The benchmark has ranged from 99.5 to 177.8 this year, CMA data show. A basis point is 0.01 percentage point.
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.