By Patricia Kuo Oct. 9 (Bloomberg) -- The perceived risk of companies and governments in Asia-Pacific defaulting on their debt fell after unprecedented coordinated interest rate cuts by central banks in North America, Europe and Asia to restore investor confidence. The Markit iTraxx Japan index was 4 basis points lower at 200 at 9:22 a.m. in Tokyo, according to prices from Credit Suisse Group AG. The benchmark of 50 investment-grade Japanese companies, including All Nippon Airways Co. and Japan Tobacco Inc., falls as investor perceptions of credit quality improve. The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each reduced their benchmark rates by half a percentage point yesterday in a bid to limit the economic impact of the global lending freeze. Switzerland also took part and China's central bank separately cut its key rate by 0.27 percentage point. Central banks in Taiwan, South Korea and Hong Kong lowered their benchmark rates today. ``Rate cuts are more of a symbolic move. What's more important now is to get Libor and money market rates down,'' said Leon Emes, a Singapore-based credit trader at ABN Amro Holding NV. The rate cuts came after the premium on the three-month London interbank offered rate over the Federal Reserve's main rate doubled in two weeks to a record. Banks aren't lending on concern borrowers may collapse, leaving them with losses. Commonwealth Bank The Markit iTraxx Australia index declined 17 basis points to 227 at 11:45 a.m. in Sydney, Citigroup Inc. prices show. The benchmark is tied to the debt of 25 companies, including BHP Billiton Ltd. and Qantas Airways Ltd. Contracts on the senior debt of Commonwealth Bank of Australia, which sold A$2 billion ($1.4 billion) of stock to fund its acquisition of HBOS Plc's Australian units, fell 10 basis points to 145 at 1:00 p.m. in Sydney, according to Citigroup. The Asia index of 50 investment-grade borrowers outside Japan slid 7 basis points to 290, while the high-yield benchmark was down 10 basis points at 830, according to ABN Amro. The cost of default protection on South Korean government debt fell after rising to the highest since at least 2004 yesterday amid a slump in the country's currency. South Korea sovereign credit-default swaps fell 5 basis points to 310 at 10:14 a.m. in Singapore, Barclays Capital prices show. Credit-default swap indexes are benchmarks for protecting investors in bonds against default, and traders use them to speculate on changes in credit quality. A basis point, or 0.01 percentage point, is worth $1,000 on a swap that protects $10 million of debt from default. Credit-default swaps pay the buyer face value in exchange for the underlying securities or cash equivalent if a borrower fails to adhere to its debt agreements. To contact the reporters on this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net.

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