Japan credit default swaps in quiet start to New Year

Credit default swaps on Japanese names were unchanged on Monday, as market participants came back for a half day after the long New Year holiday.

Traders said none of the names that usually trade were active and swaps spreads were still where they were before the holiday. One dealer also noted that some of the names did not even have two-way quotes. The mood was largely wait-and-see today, as full trading will only resume tomorrow.

But brokers said trading is likely to remain subdued given the continued threat of war in Iraq and political tensions elsewhere in the Middle East and North Korea, deflation concerns in Japan, and continued uncertainty regarding the country’s banking sector restructuring.

The Nikkei 225 stock index closed 1.6% higher today at 8,713.33 points on the back of Wall Street’s gains on Friday and traders covering their short positions.

In the electronics sector, protection on Fujitsu and NEC five-year senior debt was unchanged, at 200 basis points and 150bp, respectively. Among the banks, protection on UFJ was at 160bp and Bank of Tokyo-Mitsubishi at 75bp.