Bloomberg News

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

May 01, 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 one basis point to 107 basis points as of 8:30 a.m. in Singapore, Westpac Banking Corp. prices show. The gauge slid 14.8 basis points last month, according to data provider CMA.

The Markit iTraxx Japan index advanced two basis points to 84 as of 9:38 a.m. in Tokyo, according to Deutsche Bank AG prices. That’s the biggest increase since April 16 after the benchmark declined for six consecutive days, 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 climbed one basis point to 107 basis points as of 9:30 a.m. in Sydney, according to National Australia Bank Ltd. prices. The measure is poised for its first increase since April 26, 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: Paulina Duran in Sydney at pduran10@bloomberg.net

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


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