Bloomberg News

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

June 13, 2013

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

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 10 basis points to 137.5 basis points as of 8:24 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The measure, which had risen 12 basis points this week as of yesterday, is poised for its biggest one-day decline since Sept. 14, according to data provider CMA.

The Markit iTraxx Australia index decreased 10 basis points to 127.5 as of 10:48 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark, which has ranged from 96.1 basis points to 134 basis points this year, is set for its lowest close since June 10, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index fell 6 basis points to 105 basis points as of 9:24 a.m. in Tokyo, Citigroup Inc. prices show. The measure rose 12.2 basis points yesterday, its biggest one-day jump since Sept. 20, 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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