EM ASIA DEBT-Spreads rise but losses capped as new supply slows

HONG KONG, Nov 20 (Reuters) - Asian bond spreads widened on Friday as economic worries prompted investors to dump risky assets but an expected slowdown in the flow of new issues ahead of the year-end restricted losses.

Issues from India's ICICI Bank (ICBK.BO: Quote, Profile, Research) and Philippine state agency PSALM are widely considered to be among the last debt offerings this year, mid-way through what is expected to finish as one of the busiest quarters this year.

The Asia ex-Japan iTraxx investment-grade index <0#ITAIGMPBMK=> moved out to 110/113 basis points (bps) from Thursday's 105/109 bps as investors turned jittery after data showed the recovery in the U.S. housing market would be tepid.

But the response to the bond offer from ICICI has been quite strong as investors snap up bonds from the second biggest lender in India, one of the world's fastest growing major economies.

A market source said the bank is seen raising up to $750 million via dollar bonds due in March 2015 and that orders have exceeded $3 billion so far.

ICICI has indicated a price guidance of about 350 basis points over U.S. Treasuries and the deal is likely to be priced during New York trading hours later on Friday.

Its existing bonds due in 2012 44927AAA3= were quoted at 104.5 cents on the dollar, marginally higher while its 5-year credit default swaps ICIC5YUSAC=R were slightly wider at 200/220 bps, in line with the broad market.

PSALM, is selling bonds due in 2024 in an issue of up to $600 million and reopened its 2019 dollar bonds as part of its first debt exchange programme. [ID:nMAN371777]

The bonds are to be sold at a spread of 90-115 bps over yields on Philippine sovereign bonds of similar maturity.