The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment dropped, according to credit-default swap traders.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 2 basis points to 102.5 basis points as of 8:40 a.m. in Singapore, Westpac Banking Corp. (WBC) prices show. The gauge is set for the lowest close since March 15, according to data provider CMA.
The Markit iTraxx Australia index declined 4 basis points to 97 as of 10:19 a.m. in Sydney, according to National Australia Bank Ltd.. The benchmark is heading for the lowest close since November 2010, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Markets in Japan are closed for a national holiday. The Markit iTraxx Japan index dropped 3.6 basis points to 81.9 on May 3, the lowest since May 2008, according to CMA.
Credit-default swap indexes are benchmarks for protecting 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.
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