Bloomberg News

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

August 12, 2012

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 1 basis point to 149.5 as of 8:27 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge decreased 9.5 basis points last week to 147.5, according to data provider CMA.

The Markit iTraxx Australia index advanced 2 basis points to 157 as of 10:31 a.m. in Sydney, National Australia Bank Ltd. (NAB) prices show. The measure fell 10 basis points last week to 156.7, 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 declined 1 basis point to 185 as of 9:30 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is set for the lowest close since Aug. 1, CMA prices 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 Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

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


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