Bloomberg News

Bond Risk Decreases in Asia, Credit-Default Swap Prices Show

April 09, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 1 basis point to 116 basis points as of 8:10 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its lowest close since March 19, according to data provider CMA.

The Markit iTraxx Japan index decreased 0.5 of a basis point to 91.5 as of 9:13 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark is headed for its lowest close since Nov. 22, 2010, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia index was little changed at 114.5 as of 10:09 a.m. in Sydney, according to Westpac Banking Corp. prices. The measure has ranged from 102.3 basis points and 127.5 basis points this year, CMA prices 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: Tanya Angerer in Singapore at tangerer@bloomberg.net

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


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