Bloomberg News

Bond Risk in Asia ex-Japan Increases, Credit-Default Swaps Show

March 31, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 1.5 basis points to 122.5 basis points as of 8:26 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark, which ranged from 100.5 to 122.3 in the first three months of the year, is poised for its highest close since Nov. 16, according to data provider CMA.

The Markit iTraxx Japan index was little changed at 113 basis points as of 9:58 a.m. in Tokyo, according to Deutsche Bank AG prices. The gauge has tumbled 46 basis points so far this year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Markets in Australia are closed for a public holiday today.

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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