Bloomberg News

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

November 17, 2011

Nov. 18 (Bloomberg) -- The cost of protecting corporate and sovereign bonds from default in the Asia-Pacific region rose, according to traders of credit-default swaps.

The Markit iTraxx Japan index increased 6 basis points to 192 as of 9:05 a.m. in Tokyo, Deutsche Bank AG prices show. That’s set for its highest close since Oct. 26, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 5 basis points to 215 basis points as of 8:05 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since Oct. 11, according to CMA.

The Markit iTraxx Australia index rose 3 basis points to 197 basis points as of 11:02 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. A basis point is 0.01 percentage point.

--Editor: Edward Johnson

To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net

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


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