EM ASIA DEBT-Spreads narrow in cautious trade;eyeing Agile offer

HONG KONG, Nov 4 (Reuters) - Asian bonds were firm on
Wednesday but the tone was cautious ahead of new issues from
Chinese property developer Agile (3383.HK: Quote, Profile, Research) and Indonesian coal
miner Bumi Resources (BUMI.JK: Quote, Profile, Research), both rated below investment
grade.

The Asia ex-Japan iTraxx investment-grade index
<0#ITAIGMPBMK=> tightened by 5 basis points to 120/121. Still
it is higher than the low of 95 struck in mid-October and
September close of around 105.

After a slow start this year amid global risk aversion,
Asian bond sales have gathered pace in the third quarter, with
a sharp acceleration seen in October as borrowers locked into
the relatively low funding costs with economic recovery taking
root.

According to Thomson Reuters data, issues of bonds
denominated in dollar, euro and yen raised about $8.5 billion
in October.

Third quarter sales were at $18.7 billion compared with
$28.3 billion in the first half of the year. That took the
first nine month's average to a shade over $5 billion a month.

"Technicals are still looking poor while the supply
pipeline from now to 1Q10 looks heavy with frequent and
surprise borrowers expected," said Calyon Corporate &
Investment Bank in a note.

While the initial part of the year was dominated by
sovereign, quasi-sovereign and high-grade issuers, the recent
emergence of several potential high yield debt offerings is
causing some worry since it comes at a time when investors tend
to become defensive about their year-to-date performance.

The sub-investment grade issuers have been encouraged by
the collapse in the Asia ex-Japan iTraxx investment-grade index
ITAHY5Y=MP spreads to 440 from a March peak of 1,375.

During that period, the TRX Emerging Asia Index on a
weighted basis has narrowed to around 138 from 450.

Agile Property (3383.HK: Quote, Profile, Research) expects to price a seven-year
dollar bond not callable for four years later on Wednesday. It
has indicated a yield of around 10.5 percent.

Royal Bank of Scotland said a note the developer widened
its price guidance from the earlier 10 percent and lowered the
issue size to $300 million from $400 million.

A market source said the issue had attracted orders of
around $700 million.

Vietnam, which last made a visit to the global debt capital
markets in 2005, also plans to raise $1 billion via a bond sale
in early 2010. [ID:nHAN516864] It is rated BB, two notches
below investment grade.

Philippine bonds were cool to the news the country was
likely to breach this year's budget deficit target, while the
announcement it could issue Samurai bonds in early 2010 also
did not cause any surprises.

The bonds due in 2020 718286BF3= edged higher in tandem
with the broad market. They were quoted a quarter point higher
at 105.75 cents on the dollar.

The 5-year credit default swaps PHGV5YUSAC=MG were 1-2
basis points (bps) narrower at 192.

For history on TRX Emerging Asia Index click on --
here
sp (Reporting by Umesh Desai; Editing by Jan Dahinten)