Bloomberg News

Asia-Pacific Bond Risk Little Changed, Credit-Default Swaps Show

December 27, 2012

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

The Markit iTraxx Japan index was quoted at 158 basis points as of 10:36 a.m. in Tokyo, Deutsche Bank AG prices show. The measure, which has ranged from 136.2 to 229.5 this year, is down 64.8 basis points this quarter, on track for its biggest three-month decline since the period ended June 2009, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was also little changed at 111 basis points as of 8:48 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The gauge has ranged from 107 to 209.9 basis points this year and is down 96 basis points, its biggest 12-month decline since 2009, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia was steady at 124.5 basis points as of 10:47 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark has ranged from 120.2 basis points to 211.1 basis points this year and is down 56 basis points, also on track for its biggest 12-month drop since 2009, 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.

To contact the reporter on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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


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