Bloomberg News

Asia Bond Risk Drops for First Time in Almost a Week, Swaps Show

June 09, 2013

The cost of insuring corporate bonds against non-payment in Asia declined for the first time in almost a week, according to credit-default swap traders.

The Markit iTraxx Japan index fell 5.5 basis points to 94.5 basis points as of 9:29 a.m. in Tokyo, Citigroup Inc. prices show. The gauge is poised to fall for the first time since June 4, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 5 basis points to 126 as of 8:39 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The measure, which last declined on June 4, is set for its biggest one-day drop since May 6, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Markets in Australia are closed for a public holiday today.

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: 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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