Australian Bond Risk Rises, Credit-Default Swap Prices Show
February 12, 2012, 8:54 PM ESTBy Sarah McDonald
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 smcdonald23@bloomberg.net.
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
