Emerging debt-Asia bonds edge higher, cool to Indonesia upgrade

HONG KONG, Feb 14 (Reuters) - Asian bonds edged higher on Thursday after a surprise rise in U.S. January retail sales led investors to believe a recession in the world's largest economy was not imminent.

Debt markets were cool to an upgrade of Indonesia's sovereign rating by Fitch Ratings [ID:nWNA1003], while Philippine bond gains were capped as investors waited to see the turnout at Friday's opposition rally.

The widely followed iTRAXX Asia ex-Japan high-yield index <ITAHY5UA=ITX> -- an important measure of risk aversion -- tightened by 15 basis points (bps) to 544/549 bps.

"The case for a recession can be made, but those who make it with near certainty tend to tell only a partial story," said Rabobank Economist Jan Lambregts adding that the likelihood of a U.S. recession was 50 percent.

U.S. government data showing higher retail sales last month bucked economists' expectations for a decline. The report also took investors by surprise because it followed an anemic January jobs report and a shrinking services sector. [ID:nN13334844].

Some traders said, the latest numbers could have been a positive blip.

"There are no significant drivers besides last night's numbers which were in contrast with general expectations," a Manila-based trader said. "It was ripe for people to punt on the good news."

Philippine bonds due in 2032 <718286BD8=RRPS> were quoted at 97.375/97.625, while bonds due in 2031 <PHIGLB31=RR> were at 111.125/111.375

The country's five-year credit default swaps <PHILP5UA=GFI>, or insurance-like contracts that protect against defaults of restructuring, moved in by 10 basis points (bps) to 233 bps.