Bloomberg News

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

February 17, 2013

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

The Markit iTraxx Australia index increased 1.5 basis points to 115 basis points as of 11:33 a.m. in Sydney, according to Westpac Banking Corp. prices. The gauge is headed for its second straight daily rise after falling to its lowest in more than a month at 112.5 on Feb. 14, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose one basis point to 111.5 as of 8:10 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc prices. The benchmark is set to pare its drop this month to five basis points, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index fell 2.5 basis points to 121.5 as of 9:18 a.m. in Tokyo, Citigroup Inc. prices show. The measure ended last month at 135.2, according to CMA data.

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: Foster Wong in Hong Kong at fwong94@bloomberg.net

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


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