Bloomberg News

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

June 06, 2012

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

The Markit iTraxx Australia index fell 6.5 basis points to 195.5 basis points as of 11:01 a.m. in Sydney, according to Deutsche Bank AG. The gauge is set for its biggest daily drop since Feb. 1 and lowest close since May 29, CMA data show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 3 basis points to 194 basis points as of 8:01 a.m. in Hong Kong, Deutsche Bank prices show. The measure is also poised to close at its lowest level since May 29, 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 tumbled 7 basis points to 189 as of 9:03 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is headed for the biggest drop and lowest close since May 28, 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. A basis point is 0.01 percentage point.

To contact the reporter on this story: Sarah McDonald in Sydney at

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

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