Bloomberg News

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

November 01, 2011

Nov. 1 (Bloomberg) -- The cost of protecting Asia-Pacific corporate and sovereign bonds from default rose, according to traders of credit-default swaps.

The Markit iTraxx Australia index increased 13 basis points to 173 basis points as of 11:18 a.m. in Sydney, according to Westpac Banking Corp. The gauge is set for its biggest increase since Oct. 4, according to data provider CMA, after rising 10 basis points yesterday by New York close of trading.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan jumped 10 basis points to 189.5 basis points as of 8:16 a.m. in Hong Kong, BNP Paribas SA prices show. The index is headed for its second increase in two days after rising 13.3 basis points yesterday according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index rose 8 basis points to 169.5 as of 9:21 a.m. in Tokyo, Deutsche Securities 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.

--Editor: Edward Johnson

To contact the reporter on this story: Rachel Evans in Hong Kong at

To contact the editor responsible for this story: Shelley Smith at

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