Emerging debt-Asian bond spreads tighten; focus on Indonesia

HONG KONG, June 16 (Reuters) - Asian sovereign and corporate bond spreads tightened for a second straight session on Monday after a moderate rise in U.S. core consumer prices data eased some of the inflation worries that had recently hit the region's debt.

Trading was quiet ahead of earnings results this week from U.S. financial firms such as Goldman Sachs (GS.N) and Morgan Stanley (MS.N), amid worries the lingering global credit crisis will continue to pressure earnings in the sector.

Still, the pipeline of potential bond sales from Asia remains strong, bankers said. Indonesia is due to meet investors in London and New York later on Monday, in the last day of a roadshow for a deal that could reach as much as $2 billion.

"It's deadly quiet today. People are waiting for the results from the U.S. brokerages, and it will be hard to get any big movements ahead of that," said a Hong Kong-based trader.

The iTRAXX Asia ex-Japan high-yield index ITAHY5UA=GFI, a key measure of risk aversion, narrowed by about 10 basis points (bps) to 505, while the equivalent investment-grade index ITAIG5UA=GFI narrowed by 3-5 bps to 127/130.

Spreads tightened after data on Friday showed the core U.S. consumer price index, which excludes volatile food and energy costs, edged up 0.2 percent in May, easing some of the inflation concerns that have led central banks around the world to respond with interest rate hikes. [ID:nN13434921]

But trading was quiet. Philippines' debt, usually among the most widely traded in Asia excluding Japan, little changed.

The Philippine economy is likely to grow 5.3 to 5.9 percent in the second quarter from a year earlier, picking up from the first quarter on higher farm output and a recovery in consumer spending, the country's economic planning chief Augusto Santo told Reuters on Monday. [ID:nMAN141559]

But interest rates in the Philippines are also likely to rise on account of inflationary pressures, the country's Finance Secretary Margarito Teves said. [ID:nSP132800]

Manila bonds due in 2031 PHIGLB31=RR were quoted at 109.25/109.75 while bonds due in 2032 718286BD8=RRPS were at 95.25/95.75, both range-bound from Friday's levels.

Philippines' five-year credit default swaps (CDS) PHILP5UA=GFI, or insurance-like contracts that protect against defaults, were flat at 230/240 bps.

Investors will also focus on Indonesia's proposed debt sale, amid expectations a sizeable premium will be needed to attract investors concerned about the country's soaring inflation.

Economic growth could also slow. Trade Minister Mari Pangestu told Reuters on Sunday non-oil and gas exports may miss government forecasts and grow 13 percent in 2008 instead of 14.5 percent due to unfavourable global economic conditions. [ID:nL15541186]

Indonesia had already sold a combined $2 billion in 10-year and 30-year sovereign bonds in January, with fund managers noting it may seek to sell shorter-term debt this time around.

"The issuer hasn't really decided on the tenor yet, but there's talk that it could be a 5-year or 10-year (bond), with the chances for a 30-year being lower," said a Singapore-based fund manager who is being briefed on the transaction.

Other issuers looking to sell debt this week include South Korean retailer Shinsegae Co (004170.KS), and Trade and Development Bank of Mongolia (TDBM), which is looking to price a $100 million sale in three-year bonds after last week providing yield guidance of 11.5-11.75 percent. (For list of upcoming eurobond issuance from the region double click [EUB/ASIA])

FIVE-YEAR CREDIT DEFAULT SWAPS

Bid/Ask spread

Current Week ago Korea Dev Bank 115/~ --/-- Hutchison 94/~ --/-- PCCW-HKT 105/116 --/-- China 62/~ --/-- Indonesia 266/~ --/-- Korea ~/96 --/-- Malaysia 92/102 --/-- Philippines 230/245 --/--

~no bid or ask spread For CDS prices double click on GFICDS

ASIAN BENCHMARK DOLLAR BONDS

Coupon Maturity Bid price Bid spread

5-YEAR

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DBS Bank 7.13 15-May-11 105.24 144

Malaysia 7.50 15-Jul-11 107.37 117

ICICI Bank 5.75 12-Jan-12 95.88 334

Petronas 7.00 22-May-12 106.77 136

Hutchison 6.50 13-Feb-13 101.89 230

Chartered Semi 6.25 4-Apr-13 95.57 363

Korea 4.25 1-Jun-13 96.93 123

United Overseas 4.50 2-Jul-13 94.14 213

PCCW-HKT 6.00 15-Jul-13 102.36 174

China 4.75 29-Oct-13 98.72 130

10-YEAR

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Hutchison 6.25 24-Jan-14 102.86 295

Korea 4.88 22-Sep-14 97.97 101

PCCW-HKT 5.25 20-Jul-15 92.30 237

Woori Bank 6.13 3-May-16 96.50 245

Penerbangan 5.63 15-Mar-16 105.51 53

Philippines 8.75 7-Oct-16 117.00 185

Indonesia 6.88 9-Mar-17 98.88 280

ICICI Bank 6.38 30-Apr-22 88.88 391

Petronas 7.88 22-May-22 121.38 139

(Reporting by Rafael Nam; Editing by Neil Fullick)