The perceived risk of a bond default by Wesfarmers Ltd.rose on speculation the company may bid for the assets of failed competitorGriffin Coal Mining Co.

Griffin, Western Australia s oldest coal miner, appointed an administrator Jan. 3 after it couldn t pay interest on $475 million of bonds. Credit-default swaps on Perth-based Wesfarmers climbed 3 basis points to 87.5 basis points, according to Deutsche Bank AG prices at 11:26 a.m.in Sydney today.

 Wesfarmers always says if there s an acquisition to be made at the right price they ll strongly look at it, said Chris Walter, a credit analyst at Westpac Banking Corp. in Sydney. I wouldn t have thought Griffin would be a likely acquisition for Wesfarmers, but there s always an opportunity if you know an operation and know an area.

Western Australia won t give Griffin financial aid and the most likely outcome from administration is a change in ownership, Energy Minister Peter Collier said in an interview yesterday. Griffin said Dec. 11 that it would ask bondholders to agree to waive their rights to take enforcement action over the missed bond payment, which was originally due Dec. 1, as it struggled with a temporary liquidity shortage .

Wesfarmers, a retailer that owns chemicals businesses and the Premier Coal mine in Western Australia, is watching developments with interest, spokesman Alan Carpenter said of Griffin yesterday, declining to comment on whether the company is planning a bid.

Wesfarmers rose 2.3 percent to A$31.98 at 2:12 p.m. in Sydney today, the highest since Aug. 20, 2008.

Creditor Meeting

Griffin plans to hold a meeting for creditors in Perth on Jan. 13, the Sydney Morning Herald reported on its Web site today. Selling the business as a going concern or a restructuring are options being considered, Brian McMaster, a partner at administrator KordaMentha, said Jan. 3. The company has A$700 million ($639 million) of debt, he said.

Griffin Coal is a unit of the Griffin Group, which was founded by businessman Rick Stowe and has investments in energy, property, agriculture, coal, office products and helicopters, according to its Web site.

Credit swaps on Wesfarmers rose as the Australian risk benchmark declined. The Markit iTraxx Australia index fell 3.5 basis points to 83 basis points as of 11:25 a.m. in Sydney, Deutsche Bank prices show.

Credit-default swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements, and a rise typically signals a decline in perceptions of creditworthiness. A basis point is 0.01 percentage point and is equivalent to $1,000 a year on a contract protecting $10 million of debt.