EM ASIA DEBT-Bonds firm but investors wary of new issues

HONG KONG, Nov 6 (Reuters) - Asian spreads tightened on
Friday driven by a broad pick-up in risk appetite but tepid
investor response to new issues is becoming a source of worry
for some who expect a slowdown in primary market activity.

A new debt offering from Indonesian coal mining company
Bumi Resources (BUMI.JK) raised $300 million after the 7-year
bonds not callable for 4 years were priced at par to yield 12
percent.

The broad market was firm as investors were upbeat ahead of
the U.S. payrolls report later on Friday, expected to show the
fewest job losses since August 2008. The Asia ex-Japan iTraxx
investment-grade index <0#ITAIGMPBMK=> was quoted 2-4 basis
points tighter at 116/120.

Bonds from Philippine, the region's most active sovereign
issuer, were marginally higher and the cost of insuring its
debt fell, but volumes were thin.

The bonds due in 2034 718286BG1= were quoted 96.75/98 and
its 5-year credit default swaps PHGV5YUSAC=MG were quoted at
178 bps, down from Thursday's 182/192.

But the mood was edgy as was reflected in the slack demand
for new issues.

"The market is having a bout of indigestion from new
issues. I am not sure there will be many more issuers coming in
the rest of the year unless sentiment improves significantly,"
said a Hong Kong based fund manager.

Bumi's new bonds were trading at 100.125/100.375 cents on
the dollar after the offer received orders of around $600
million, a small oversubscription relative to other recently
concluded deals.

The bonds were mainly sold to U.S.-based investors who took
up 37 percent of allotments. Asia with 33 percent and Europe
with 30 percent accounted for the rest.

By investor type funds accounted for 73 percent, pension
funds and insurance companies 14 percent, retail buyers 7
percent and banks and others 6 percent.

A Hong Kong based analyst said the Bumi sale was executed
at the higher end of the initial yield guidance and also had to
settle for a lower amount after targeting around $350 million,
both indicative of the tepid response.

That response could throttle the recovery in primary
markets which has seen a strong showing in recent weeks in a
year which started on a slow note.

Issues of bonds denominated in dollars, euros and yen have
raised about $8.5 billion in October, compared with $47 billion
raised in the first nine months of the year, averaging a shade
over $5 billion each month.

Waiting in the wings are issuers such as India's Axis Bank
(AXBK.BO) which concluded a series of investor presentations
last week with an eye on a benchmark-sized dollar bond
transaction.

A source close to the deal said the bank had not decided on
the timing of the issue.

LATEST MAJOR RATINGS ACTIVITY IN ASIA (EXCLUDING JAPAN)

Moody's assigns B2 rating on Indika's $230 mln bond
[ID:nWNA7424]
For history on TRX Emerging Asia Index click on --
here
sp FIVE-YEAR CREDIT DEFAULT SWAPS

Bid/Ask spread

Current Week ago

Korea Dev Bank 111.60* 111.62*

Hutchison 83/87 85/89

PCCW-HKT 106.25* 106.51*

China 80/84 77/81

Indonesia 206/217 186/195

Korea 101/106 96/101

Malaysia 99/104 91/95

Philippines 184/194 174/183

~no bid or ask

*midspread

For CDS prices double click on REUTERSCDS

For more bond prices click on ASIASPREADSASIASPREADT
(Reporting by Umesh Desai; Editing by Kazunori Takada)