Bloomberg News

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

February 21, 2013

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

The Markit iTraxx Australia index advanced 2 basis points to 116 basis points as of 11:04 a.m. in Sydney, according to National Australia Bank Ltd. prices. The benchmark is on track to increase 2.3 basis points this week and set for its biggest weekly rise since the five-day period ended Nov. 16, according to data provider CMA.

The Markit iTraxx Japan index increased 0.5 of a basis point to 125.8 as of 9:12 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is headed for its first weekly rise since the week ended Dec. 7, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 1 basis point to 109.5 as of 8:24 a.m. in Hong Kong, according to Credit Agricole SA prices. The measure is set to fall 1.8 basis points this week, its third straight weekly drop, CMA data 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: 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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