Bloomberg News

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

June 18, 2012

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 3 basis points to 180 basis points as of 8:24 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc. The gauge is set for its first increase since June 8, according to data provider CMA.

The Markit iTraxx Australia index advanced 5 basis points to 186 basis points as of 10:22 a.m. in Sydney, National Australia Bank Ltd. (NAB) prices show. The benchmark is headed for its highest close since June 15, 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 173 basis points as of 9:24 a.m. in Tokyo, Deutsche Bank AG 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.

To contact the reporter on this story: Rachel Evans in Hong Kong at

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

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