Bloomberg News

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

November 20, 2012

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

The Markit iTraxx Japan index decreased 4 basis points to 180 as of 9:22 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is on track for its lowest close in more than two months, according to data provider CMA.

The Markit iTraxx Australia index dropped 2 basis points to 140 as of 11:27 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. (ANZ) The measure is on course for the lowest close in two weeks, CMA prices show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1.5 to 121 as of 8:28 a.m. in Hong Kong, Credit Agricole SA (ACA) prices show. The gauge is set for its lowest close since Nov. 8, 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. 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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