Bloomberg News

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

December 06, 2011

Dec. 7 (Bloomberg) -- The cost of insuring corporate bonds in Japan 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 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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