Bloomberg News

Bond Risk Decreases in Asia, Credit-Default Swap Prices Show

December 15, 2011

Dec. 16 (Bloomberg) -- The cost of insuring Asia corporate and sovereign bonds against non-payment decreased, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 4 basis points to 212 basis points as of 8:02 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its lowest close since Dec. 15, according to data provider CMA.

The Markit iTraxx Japan index slid 2 basis points to 189 as of 9:01 a.m. in Tokyo, Deutsche Bank AG prices show. The index is headed for its lowest close since Dec. 13, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index was little changed at 196 basis points as of 11:01 a.m. in Sydney, according to Westpac Banking Corp.

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: Katrina Nicholas

To contact the reporter on this story: Tanya Angerer in Singapore at

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

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