Bloomberg News

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

November 01, 2012

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

The Markit iTraxx Australia index slid 5 basis points to 137 basis points as of 11:08 a.m. in Sydney, according to Westpac Banking Corp. The measure is on course for its lowest close since Oct. 18, according to data provider CMA.

The Markit iTraxx Japan index fell 5 to 206 as of 9:11 a.m. in Tokyo, according to Deutsche Bank AG. The benchmark, which has ranged from 203 to 209.7 this week, is heading for its third straight weekly decline, CMA and Deutsche Bank prices show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 2 to 118 as of 8:09 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge has traded between 117.9 and 125.4 this week, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

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.

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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