Bloomberg News

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

February 04, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced five basis points to 120.5 basis points as of 8:35 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close in more than two months, according to data provider CMA.

The Markit iTraxx Australia index rose four basis points to 122.5 as of 11:30 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark is poised to rise three basis points this month, after retreating for a fifth straight month in January, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index climbed two basis points to 132 basis points as of 9:28 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure is on track for its highest close since Feb. 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.

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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