Asia-Pacific bond risk falls, credit-default swap prices show

28-May-2012 Intellasia | Bloomberg | 7:01 AM Print This Post

The cost of protecting Asia-Pacific corporate and sovereign bonds from default dropped, according to traders of credit-default swaps.

The Markit iTraxx Japan index slid 6 basis points to 200 basis points as of 9:26 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is set for its lowest close since May 11, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 2 basis points to 196 basis points as of 8:37 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest closing level since May 22, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index was little changed at 196 basis points as of 11 a.m. in Sydney, according to Westpac Banking Corp. (WBC)

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. A basis point is 0.01 percentage point.


Category: FinanceAsia

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