Bloomberg News

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

March 05, 2013

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

The Markit iTraxx Japan index fell 3 basis points to 113 basis points as of 9:37 a.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its lowest close since March 2011, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 1 basis point to 106 as of 8:35 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is set for its lowest close since Jan. 14, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index dropped 3 basis points to 112 as of 11:37 a.m. in Sydney, according to Westpac Banking Corp. The gauge is on course for its lowest close since Feb. 22, according to CMA.

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: Rachel Evans in Hong Kong at revans43@bloomberg.net

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


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