Bloomberg News

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

December 06, 2011

Dec. 7 (Bloomberg) -- The cost of insuring corporate bonds in Asia against non-payment fell, according to credit-default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 194.5 basis points as of 8:44 a.m. in Hong Kong, Credit Agricole SA prices show. The benchmark has added 92.5 basis points this year, headed for its second straight yearly climb, 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 1 basis point to 185 as of 11:47 a.m. in Sydney, according to Credit Agricole.

The Markit iTraxx Japan index was unchanged at 187 basis points as of 9:42 a.m. in Tokyo, Deutsche Bank AG 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.

--Bloomberg News, with assistance from Henry Sanderson in Beijing. Editor: Pavel Alpeyev

To contact Bloomberg News staff for this story: Bloomberg News in Beijing at emailtv@bloomberg.net

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


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