Bloomberg News

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

November 27, 2011

Nov. 28 (Bloomberg) -- The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment declined, set for the first decrease at least in a week, according to credit- default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 7 basis points to 231 as of 8:13 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. That’s on course for its first decline since Nov. 18, and biggest daily decrease since Nov. 10, according to data provider CMA, which is owned by CME Group Inc., and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index fell 6 basis points to 219 as of 11:12 a.m. in Sydney, according to Westpac Banking Corp. The benchmark is headed for its first decline since Nov. 18 and largest one-day decrease since Nov. 4, CMA prices show.

The Markit iTraxx Japan index dropped 2 basis points to 208 basis points as of 9:12 a.m. in Tokyo, Deutsche Bank AG prices show. That’s set for its first decline since Nov. 14, according to CMA prices in New York.

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: Pavel Alpeyev

To contact the reporter on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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


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