Bloomberg News

Asia-Pacific Bond Risk Falls, Credit-Default Swap Prices Show

September 29, 2011

Sept. 30 (Bloomberg) -- The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment fell, according to credit-default swap traders.

The Markit iTraxx Japan index dropped 8 basis points to 198.5 basis points as of 9:25 a.m. in Tokyo, Citigroup Inc. prices show. A decline of 8 basis points would be the most since Sept. 16, while a close of 198.5 would be the lowest since Sept. 21, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 6 basis points to 232 as of 8:26 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The Markit iTraxx Australia index fell 4 basis points to 210 basis points as of 10:22 a.m. in Sydney, Westpac Banking Corp. prices show.

Credit-default swap indexes are benchmarks for protecting 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.

--Editor: Beth Thomas

To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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