http://www.bloomberg.com/apps/news?pid=20601009&sid=aI1r2u4IRKBI&refer=bond Asia Government Debt Risk Declines as Investors Purchase Bonds
By Oliver Biggadike and Patricia Kuo Oct. 28 (Bloomberg) -- The cost of protecting the sovereign debt of Asian countries declined as investors returned to the cash market to buy bonds. Five-year credit-default swaps on Indonesia's external debt declined 150 basis points to 1,100 as of 12:35 p.m. in Singapore, according to prices from Barclays Capital. Contracts on the Philippines fell 93 basis points to 750 and swaps on South Korea dropped 65 basis points to 655, Barclays data show. ``We saw some buying in cash bonds overnight so it does look like there was some bottom fishing,'' said Tim Condon, head of Asia research at ING Groep NV in Singapore. ``It's the only silver lining in these horrible times.'' Dollar-denominated government bonds in Asia rose yesterday for the first time in eight days, according to an average on the JPMorgan Chase & Co. Asia Credit Index. Concern about falling prices had slowed trading in the securities as investors boosted holdings of cash. Investors bought Asian sovereign debt as Treasuries fell for a second day on concern supply will jump so the U.S. government can fund its $700 billion bank rescue. The Markit iTraxx Japan index fell 5 basis points to 325 as of 12:53 p.m. in Tokyo, according to prices from Credit Suisse Group. Australia's benchmark of credit default swaps was quoted 25 basis points lower at 360, Citigroup Inc. data show. The benchmarks fall as perceptions of credit quality improve. The Markit CDX North America Investment Grade Index, linked to the bonds of 125 companies in the U.S. and Canada, was unchanged at 225 basis points at 4:14 p.m. in New York yesterday after dropping earlier to as low as 214, according to broker Phoenix Partners Group. Credit-default swaps are used to protect against or speculate on default and pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements. A basis point, or 0.01 percentage point, is worth $1,000 on a swap that protects $10 million of debt from default. To contact the reporter on this story: Oliver Biggadike in Tokyo at [EMAIL PROTECTED]; Patricia Kuo in Hong Kong at [EMAIL PROTECTED] Last Updated: October 28, 2008 00:47 EDT
