EM ASIA DEBT-Spreads at 5-month highs; Bank of India eyed

HONG KONG, Feb 9 - Asian bond spreads widened to five-month highs on Tuesday after an overnight drop on Wall Street prompted investors to dump riskier assets, while all eyes were on Bank of India's <BOI.BO> planned debt issue.

Some traders were speculating that Bank of India, which completed its roadshow in London on Monday, may defer the sale due to the volatile market, but sources close to the deal said the issuer has not yet made any decision.

Last week, another Indian lender, Bank of Baroda <BOB.BO> postponed its planned dollar bond sale. [ID:nTOE61403X]

The Asia ex-Japan iTraxx investment-grade index <ITAIG5Y=MP> widened to 133/135 basis points , traders said, the highest since Sept. 4, 2009, and compared with 124/127 on Monday.

The Thomson Reuters Index of Asia emerging credit was quoted at 217.36 on a simple average basis and at 157.29 on a weighted average, the highest since Sept. 3, 2009.

U.S. stocks finished lower on Monday, with the Dow Jones industrial average <.DJI> closing below 10,000 for the first time since November, as investors sold banking shares on rising worries about the debt problems of Greece, Portugal and Spain.

"It's a broad sell off across risky assets," said Brayan Lai, credit analyst at Credit Agricole. "Everybody is pretty much content to wait for valuations to fall much further. For the moment, I don't really see a reversal. Market will probably be still soft in the next couple of sessions at least."

Recent issues were all down. Star Energy bonds due in 2015, sold last Friday, were traded at 99.25/100.25 cents on the dollar, down from 100.25/100.75 on Monday, traders said. BOC Hong Kong's <2388.HK> 10-year bonds, sold last week, were traded at 220/225 bps over U.S. Treasuries versus 215.

Bonds issued by Chinese developers were also weak due to Beijing's moves to cool its property sector. Evergrande's <3333.HK> bonds due in 2015 <US048284361=RTR> were down a point to 98.25 cents on the dollar.

"It's a combination of the weak general market and sector specific," a trader from Singapore said.

"There is a lot of negative news from China on the regulatory side, specially on the tightening of credit to developers. The market doesn't know what regulation will come next."

Sovereign debts from the Philippines and Indonesia, the region's most active global bond issuers, were also down. The Philippines' 10-year bonds <718286BF3=> fell to 104.50/104.75 cents on the dollar from 105/105.375.

"On Bank of India, I would not be surprised if it would be postponed like Bank of Baroda," Lai said.

"The market might be a bit too choppy right now for it to continue. Having said that, if they adjust the pricing wider, perhaps they can still get that done."

For new issue diary please click on [EUB/ASIA]

For history on TRX Emerging Asia Index click on -- http://credit-content.session.rservices.com/reddatabase/TopRed.a sp For potential foreign-currency bond issuances in Asia, excluding Japan, please click [EUB/ASIA]

FIVE-YEAR CREDIT DEFAULT SWAPS

Bid/Ask spread

Current Week ago

Korea Dev Bank 135.67* 123.27*

Hutchison 91/96 82/86

PCCW-HKT 96.26* 97.48*

China 90/95 84/88

Indonesia 221/232 189/199

Korea 127/134 108/113

Malaysia 120/126 105/111

Philippines 215/226 188/197

~no bid or ask

*midspread

For CDS prices double click on <REUTERSCDS>

For more bond prices click on <ASIASPREADS><ASIASPREADT>