Australian credit-default swaps (CDS)

Tuesday, 5 April 2011 08:57

There was a $2.72 billion of contracts on Australian government debt outstanding mid March, the highest level since at least May 2009, according to DTCC data. The number of contracts on Australia has overtaken Iceland, Vietnam and Israel in the past 12 months.

Swap contracts used to speculate on creditworthiness and government bond prices rose to 1,284 covering a net amount of $2.7 billion as of March 25, from 551 and $1.2 billion a year earlier. China took over 27 percent of the nation’s exports in January and any slowdown of the world’s fastest-growing economy would seriously threaten a resources boom that’s driven Australia’s export earnings from commodities to a record, not forgetting the AUS$ growth off the back of it.

China has surpassed the U.S. and Japan to become Australia’s largest economic partner as bilateral trade quadrupled over the past seven years to A$97.6 billion ($101.4 billion) in 2010, according to government data.