Bloomberg News

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

April 03, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 2 basis points to 122 as of 8:28 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark has ranged from 100.5 to 122.3 since Dec. 31, 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 increased 1.5 basis points to 111 as of 9:28 a.m. in Tokyo, according to Deutsche Bank AG prices. The gauge fell 46 basis points in the three months ended March 31, its second consecutive quarter of declines, CMA data show.

The Markit iTraxx Australia index climbed 1.5 basis points to 120 as of 10:45 a.m. in Sydney, Westpac Banking Corp. prices show. The measure has ranged from 102.3 basis points to 127.5 this year, 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: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net


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