Bloomberg News

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

March 05, 2012

The cost of insuring corporate and sovereign bonds from non-payment increased in the Asia-Pacific region outside of Japan, according to traders of credit-default swaps.

The Markit iTraxx Australia index climbed 2.3 basis points to 145.3 basis points as of 11:17 a.m. in Sydney, Deutsche Bank AG prices show. The gauge is set for its highest close since Feb. 17, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 1 basis point to 162 as of 8:46 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The index is headed for its highest close since Feb. 27, 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 was little changed at 142.5 basis points as of 9:10 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.

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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