Bloomberg News

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

May 10, 2012

The cost of insuring 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 rose 2 basis points to 181 basis points as of 8:22 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is set for its highest close since Jan. 31, according to data provider CMA.

The Markit iTraxx Australia index advanced 2 basis points to 179 as of 10:22 a.m. in Sydney, Credit Agricole prices show. The index is poised to close at the highest level since Jan. 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 was little changed at 200 basis points as of 9:20 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure reached 204 basis points on May 9, the highest since Nov. 30, CMA data 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: 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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