Bloomberg News

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

June 02, 2013

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

The Markit iTraxx Japan index rose 4 basis points to 100.5 basis points as of 9:11 a.m. in Tokyo, Citigroup Inc. prices show. The gauge, which advanced last month for the first time since September, is set for its highest close since April 4, according to data provider CMA.

The Markit iTraxx Australia index climbed 3 basis points to 113 as of 10:23 a.m. in Sydney, according to National Australia Bank Ltd. prices. The benchmark, which has ranged from 96.1 to 127.5 this year, is headed for its highest level since April 22, CMA data show.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 1.5 basis points to 117 as of 8:33 a.m. in Singapore, Westpac Banking Corp. prices show. The measure is set for its fourth consecutive daily increase to its highest since April 10, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. An increase signals deteriorating perceptions of creditworthiness, while a drop 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: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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


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