Emerging debt-Asian bonds rise on equities, eyes on Nine Dragons

HONG KONG, April 21 (Reuters) - Asian bonds rose on Monday after a sharp rally in global equity markets, while the response to a primary debt offering from Chinese firm Nine Dragons was closely watched as a guage of risk appetite.

The iTRAXX Asia ex-Japan high-yield index ITAHY5UA=ITX, a key measure of risk aversion, tightened to around 482/492 basis points (bps) from Friday's close of 528/531 bps. The high grade index ITAIG5UA=ITX moved in to 101/104 bps from 119/122 bps.

"Just look at the dollar yen, the U.S. equities -- there is a feel of real money buying," said a Singapore-based trader referring to Wall Street's rally on Friday and the dollar's gains against the Japanese yen. [ID:nT252633]

A $300 million bond offering by Nine Dragons Paper (Holdings) Ltd (2689.HK), China's largest paper board producer, is the latest deal to provide evidence of investor appetite for emerging market assets. [ID:nHKG259013]

Bankers predict more Asian issuers will sell debt in beleaguered dollar-bond markets after two bond issuers raised $700 million earlier this month, suggesting some stability may be returning to markets.

Offshore bond issued from Asia ex-Japan raised US$6.3 billion in the first quarter this year, a 53 percent decline from a year earlier, according to Thomson Financial.

"The new issue market is significantly improved following the rally in Itraxx and global equities," said Sean Henderson, Asia-Pacific head of debt syndicate at HSBC.

"The various measures taken by the central banks to alleviate systemic risks across the global financial system have opened one of the the best windows in months," he said.

Media reports said the Bank of England will announce a $99.8 billion government bond swap to break a lending squeeze while the Bank of Japan is likely to drop its rate hike stance.

But concerns about rising food prices affecting growth and raising security concerns are keeping traders on the edge.

"If food prices go up in emerging markets you have concerns about stability, law and order and budget deficits. That affects investor confidence," said the Singapore-based trader.

United Nations Secretary-General Ban Ki-moon said on Sunday that higher food prices risk wiping out progress towards reducing poverty and if allowed to escalate, could hurt global growth and security. [ID:nL20242445]

Meanwhile, bonds from The Philippines, Asia ex-Japan's biggest offshore bond issuer, were mixed.

It 2031 issue PHIGLB31=RR was steady at 113.375/113.75 cents to a dollar.

But Philippine 5-year CDS PHILP5UA=GFI -- insurance-like contracts that protect against defaults and restructuring -- moved in by 10 bps to 178/190 bps.

A Manila-based trader said recent optimism was reined in after hopes faded for an aggressive rate cut by the U.S. Federal Reserve later this month.

Two weeks ago, the Fed was expected to cut its benchmark federal funds rate to 1.5 percent from its current 2.25 percent level, with a half-percentage-point cut likely on April 30.

By Friday, fed funds futures contracts pointed to a quarter-percentage-point rate cut this month instead. FEDWATCH

FIVE-YEAR CREDIT DEFAULT SWAPS

Bid/Ask spread

Current Week ago Korea Dev Bank 105/~ 105/~ Hutchison 80/105 115/138 PCCW-HKT ~/160 ~/220 China ~/53 60/~ Indonesia 192/~ 241/~ Korea 60/73 78/87 Malaysia ~/75 81/89 Philippines 170/190 224/233 ~ no bid or ask spread For CDS prices double click on GFICDS

ASIAN BENCHMARK DOLLAR BONDS

Coupon Maturity Bid price Bid spread

5-YEAR

------

DBS Bank 7.13 15-May-11 107.31 161

Malaysia 7.50 15-Jul-11 112.08 58

ICICI Bank 5.75 12-Jan-12 96.12 401

Petronas 7.00 22-May-12 110.68 120

Hutchison 6.50 13-Feb-13 104.60 246

Chartered Semi 6.25 4-Apr-13 97.68 387

Korea 4.25 1-Jun-13 98.49 165

United Overseas 4.50 2-Jul-13 93.18 311

PCCW-HKT 6.00 15-Jul-13 102.36 254

China 4.75 29-Oct-13 100.49 171

10-YEAR

-------

Hutchison 6.25 24-Jan-14 ~ ~

Korea 4.88 22-Sep-14 100.90 97

PCCW-HKT 5.25 20-Jul-15 93.44 265

Woori Bank 6.13 3-May-16 96.77 291

Penerbangan 5.63 15-Mar-16 105.51 104

Philippines 8.75 7-Oct-16 119.63 204

Indonesia 6.88 9-Mar-17 103.88 255

ICICI Bank 6.38 30-Apr-22 85.62 497

Petronas 7.88 22-May-22 123.64 171 (Reporting by Umesh Desai, editing by Neil Fullick)