Bloomberg News

Bond Risk Decreases in Asia-Pacific ex-Japan, Default Swaps Show

April 22, 2013

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

The Markit iTraxx Australia index slid 0.5 of a basis point to 113 basis points as of 10:25 a.m. in Sydney, according to Deutsche Bank AG. The gauge is on course for its lowest close since April 12, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 1 basis point to 112.5 as of 8:42 a.m. in Hong Kong, Royal Bank of Scotland Group Plc (RBS) prices show. The benchmark has fallen 9.8 basis points this month, according to RBS and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index rose 0.5 of a basis point to 92 basis points as of 9:25 a.m. in Tokyo, Deutsche Bank prices show. The measure has fallen 21 basis points this month, according to Deutsche Bank and CMA prices.

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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