Bloomberg News

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

April 21, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 1 basis point to 113 basis points as of 8:24 a.m. in Hong Kong, Westpac Banking Corp. prices show. The index is on course for its lowest close since March 19, according to data provider CMA.

The Markit iTraxx Australia index decreased 1.5 basis points to 114.25 as of 10:12 a.m. in Sydney, according to Westpac. The gauge is set for its first decline since April 11, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index fell 1 basis point to 92 basis points as of 9:24 a.m. in Tokyo, Citigroup Inc. prices show. The index, which has ranged from 90.5 to 148.1 this year, is poised for its lowest close since April 15, 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: Katrina Nicholas at knicholas2@bloomberg.net


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