Bloomberg News

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

April 16, 2012

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

The Markit iTraxx Australia index dropped 4 basis points to 158 basis points as of 10:19 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The measure yesterday closed at 159.4, the highest level since Jan. 30, according to data provider CMA.

The Markit iTraxx Japan index fell 2 basis points to 176 as of 9:16 a.m. in Tokyo, Deutsche Bank AG prices show. The measure has traded between 136 and 194.5 this year, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 167.5 basis points as of 8:24 a.m. in Hong Kong, Royal Bank of Scotland Group Plc. prices show. The index has ranged from 209 to 132.5 this year, according to CMA.

Credit-default swap indexes are benchmarks for insuring 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: Taejin Park in Seoul at

To contact the editor responsible for this story: Shelley Smith at

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