The cost of protecting 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 climbed 3 basis points to 166.5 basis points as of 8:23 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc. The gauge is set for its highest close since April 27, according to data provider CMA.
The Markit iTraxx Australia index rose 1 basis point to 157 basis points as of 10:26 a.m. in Sydney, National Australia Bank Ltd. prices show. The index is also headed for its highest close since April 27, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Japan’s markets are closed today for a national holiday. The Markit iTraxx Japan index jumped 28.3 basis points to 182.4 in April, the biggest monthly increase since November, CMA 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.
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