Pakistan To Join International Debt Benchmark iTRAXX
Pakistan, along with PTT Aromatics & Refining Pcl, a unit of Thailand's largest energy company, is expected to join Markit's iTraxx Asia ex-Japan Index of credit-default swaps, after demand to trade on the contracts rose, reports Bloomberg.com. Pakistan, whose credit-default swaps have more than doubled since October because of growing political uncertainty and tension between rival parties, is slated to join the benchmark and the 20- member sub-index for non investment-grade governments and companies. Credit-default swaps are an indicator of the cost of bond insurance that varies with the risk of bond default. Credit default swaps are usually bought by bond holders from credit insurance companies like Ambac, FGIC, and MBIA. These insurers reimburse bondholders in case the bond issuing companies or governments default. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. This is the first ...