Bloomberg News

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

October 12, 2011

Oct. 13 (Bloomberg) -- The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment decreased, according to credit-default swap traders.

The Markit iTraxx Australia index dropped 11 basis points to 196 basis points as of 11:35 a.m. in Sydney, Westpac Banking Corp. prices show. A close of 196 would be the lowest since Oct. 12 while a decline of 11 basis points would be the most since Oct. 5, according to data provider CMA.

The Markit iTraxx Japan index fell 7 basis points to 193.5 as of 9:24 a.m. in Tokyo, Citigroup Inc. prices show. A close of 193.5 would be the lowest since Sept. 21, CMA data show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 6 basis points to 207.5 basis points as of 8:34 a.m. in Singapore, Royal Bank of Scotland Group Plc 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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