Bloomberg News

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

March 12, 2012

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 155.5 basis points as of 9:21 a.m. in Singapore, BNP Paribas SA prices show. The gauge is poised to close at its lowest level since Sept. 2, according to data provider CMA.

The Markit iTraxx Australia index declined 1 basis point to 144 as of 12:22 p.m. in Sydney, BNP prices show. The measure is set for its lowest close since March 9, 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 half a basis point to 141 basis points as of 10:06 a.m. in Tokyo, Deutsche Bank AG 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.

To contact the reporter on this story: Benjamin Garvey in Hong Kong at bgarvey8@bloomberg.net

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


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