Bond Risk in Japan Increases, Credit-Default Swap Prices Show
February 08, 2012, 9:16 PM ESTBy Yusuke Miyazawa
Feb. 9 (Bloomberg) -- The cost of protecting bonds in Japan against non-payment rose, according to credit-default swap traders.
The Markit iTraxx Japan index climbed 5 basis points to 144.5 as of 9:43 a.m. in Tokyo, Citigroup Inc. prices show. The gauge is set for its first increase since Jan. 30, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 2 basis points to 161 as of 9:08 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The benchmark is also on course for its first rise since Jan. 30, 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 142 basis points as of 11:30 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: Andrew Monahan
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
