Asia-Pacific bond risk falls, credit-default swap prices show
The cost of protecting investors in Asia-Pacific bonds fell, credit-default swaps show.
The Markit iTraxx Australia index was quoted 10 basis points lower at 335 as of 10:50 a.m. in Sydney while the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan was also 10 basis points lower at 310 as of 8:50 a.m. in Singapore, according to ABN Amro Holding NV.
The Markit iTraxx Japan index was unchanged at 307.5 basis points at 9:17 a.m. in Tokyo, BNP Paribas prices show.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. An increase suggests deteriorating investor perceptions of credit quality and a drop shows improvement.
The contracts pay the buyer face value in exchange for the underlying securities if a borrower fails meet its debt agreements. A basis point, or 0.01 percentage point, is worth US$1,000 on a swap that protects US$10 million of debt from default.
