Bloomberg News

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

January 31, 2012

Feb. 1 (Bloomberg) -- The cost of protecting Asia-Pacific corporate and sovereign bonds against non-payment fell, according to credit-default swap traders.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 0.5 basis points to 182.5 as of 8:31 a.m. in Hong Kong, Credit Agricole SA prices show. The measure is set for its second straight decrease, according to data provider CMA. The gauge has fallen 24 basis points this year, according to CMA.

The Markit iTraxx Japan index fell 2 basis points to 158 as of 9:45 a.m. in Tokyo, Deutsche Bank AG prices show. The index is on track for its lowest close since Sept. 16. It fell 12.9 basis points last week, 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 fell 0.5 basis points to 157.5 as of 11:31 in Sydney, Credit Agricole 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.

--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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