Bloomberg News

Australian Bond Risk Rises, Credit-Default Swap Prices Show

February 12, 2012

Feb. 13 (Bloomberg) -- The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit-default swaps.

The Markit iTraxx Australia index rose 2 basis points to 144 basis points as of 12:10 p.m. in Sydney, according to Deutsche Bank AG. The Markit iTraxx Asia index of 40 investment- grade borrowers was little changed at 165 as of 8:52 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.

The Markit iTraxx Japan index was little changed at 148 basis points as of 9:36 a.m. in Tokyo, Deutsche Bank 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.

--Editor: Beth Thomas

To contact the reporter on this story: Sarah McDonald in Sydney at

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

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