Bloomberg News

Japan, Australia Bond Risk Increases, Credit-Default Swaps Show

December 10, 2012

The cost of insuring corporate bonds from non-payment in Japan and Australia rose, according to traders of credit-default swaps.

The Markit iTraxx Japan index increased 1.5 basis points to 170.5 basis points as of 9:16 a.m. in Tokyo, Citigroup Inc. prices show. The index, which has ranged from 165 basis points to 229.5 basis points since June 30, advanced 4.8 basis points last week, according to data provider CMA.

The Markit iTraxx Australia index climbed 0.5 of a basis point to 127.5 as of 11:16 a.m. in Sydney, according to Westpac Banking Corp. The measure has ranged from 126.6 to 186 this half, according to CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 114 basis points as of 8:15 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge rose 2.4 basis points last week, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

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

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

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