Bloomberg News

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

March 04, 2012

The cost of insuring Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 3.5 basis points to 160.5 basis points as of 8:44 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The index is headed for its largest daily climb since Feb. 10, according to data provider CMA.

The Markit iTraxx Australia index rose 3.5 basis points to 141 basis points as of 11:11 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The gauge is also set for its biggest daily increase since Feb. 10, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index rose 2 basis points to 141.5 as of 9:16 a.m. in Tokyo, Citigroup Inc. 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.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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