Oct. 21 (Bloomberg) -- The cost of protecting Asia-Pacific corporate and sovereign bonds from default fell, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 207 basis points as of 8:41 a.m. in Beijing, Royal Bank of Scotland Group Plc prices show.
The Markit iTraxx Australia index dropped 4 basis points to 186 basis points as of 10:38 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd.
The Markit iTraxx Japan index was unchanged at 192 basis points as of 9:35 a.m. in Tokyo, Citigroup Inc. 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. A basis point is 0.01 percentage point.
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