Bloomberg News

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

July 03, 2012

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

The Markit iTraxx Australia index dropped 3.5 basis points to 170 basis points as of 10:13 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The index has traded between 211 basis points and 128 basis points this year, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 3 basis points to 166 as of 8:14 a.m. in Singapore, Standard Chartered Plc prices show. The gauge is on track for its seventh-consecutive day of decline and its lowest close since May 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index decreased 3 basis points to 169 basis points as of 9:14 a.m. in Tokyo, Deutsche Bank AG prices show. The measure is set for the lowest close since April 13, CMA data show.

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: Tanya Angerer in Singapore at tangerer@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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