Bloomberg News

Asia-Pacific Bond Risk at Six-Month Low, Default-Swaps Show

March 13, 2012

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 147 basis points as of 8:27 a.m. in Singapore, Barclays Plc prices show. The gauge is poised to close at its lowest level since Sept. 1, according to data provider CMA.

The Markit iTraxx Australia index declined 5 basis points to 137 as of 11:26 p.m. in Sydney, Barclays prices show. The measure is set for its lowest close since Aug. 5, 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 fell 3 basis points to 137 basis points as of 9:21 a.m. in Tokyo, Deutsche Bank AG prices show. The measure is set for its lowest close since Aug. 18, according to CMA.

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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