Emerging debt-Asian bond spread widen led by Thailand, Malaysia

HONG KONG, Sept 1 (Reuters) - Thailand's bond spreads
widened on Monday as continued protests against the prime
minister intensified concerns about political instability,
while Malaysia's debt was hit by uncertainty over its fiscal
standing.

Regional bond spreads also moved out as stock markets
slumped on worries over corporate profits, and as inflation
fears returned after Hurricane Gustav's approach to the U.S.
Gulf coast pushed up oil prices.

Investors also worry a slew of expected new issuance this
month could keep spreads from tightening.

Hong Kong's Wing Hang Bank (0302.HK: Quote, Profile, Research) was first out of the
gate, setting guidance for its sale of perpetual bonds at a
coupon of 9.5 to 10 percent, a source said on Monday, though no
size has been determined.

"Thailand is the main focus today. It really depends on how
the current political situation is going to be handled.
Malaysia is also facing a deteriorating domestic financial
situation," said a Hong Kong-based trader.

Thailand's five-year credit default swaps THAILD5UA=GFI,
or insurance-like contracts that protect against defaults or
restructuring, widened by 8-10 basis points to 140.

The country's sovereign bond spreads have pushed out by
some 20 basis points since Aug. 26, when protesters began
occupying Prime Minister Samak Sundaravej's official compound,
vowing to remain until he and his elected government fall.
[ID:nSP195323] and [ID:nBKK8925]

The concerns over political instability overshadowed data
on Monday showing Thailand's annual inflation rate was much
lower than expected at 6.4 percent in August. [ID:nBKK316426]

Concerns over Malaysia also took centre stage after the
government on Friday announced an expansionary federal budget
that would push the budget deficit well beyond the government's
earlier targets. [ID:nKLR308824]

Malaysia's five-year CDS MALAYS5UA=GFI pushed out by some
5-8 basis points to about 125 since the news.

Investors have been deeply concerned about surging
inflation in the region at a time of slowing regional economic
growth, though there are signs that interest rate increases in
the region may be nearing their peak. [ID:nSP8935]

Regional bond spreads widened on Monday as concerns over
the outlook for earnings, especially in the technology sector,
sent Asian stocks tumbling.

Oil prices may become another concern as Hurricane Gustav
approaches the U.S. Gulf coast, threatening oil production in
the region. U.S. crude prices CLc1 rose 98 cents to $116.44 a
barrel as of 0450 GMT on Monday.

The iTRAXX Asia ex-Japan high-yield index, a key measure of
risk aversion, widened by 7-8 basis points to 560, while the
equivalent investment-grade index ITAIG5YIA= moved out by 3
bps to 158.

A handful of issuers are expected to sell debt this month,
as fundraising needs become more urgent as the end of the year
approaches.

Wing Hang Bank is expected to price its offering of
perpetual bonds, which are intended as upper Tier 2 capital,
later this week, according to a source involved in the deal.
(For a list of upcoming debt issuance from Asia see [EUB/ASIA]

FIVE-YEAR CREDIT DEFAULT SWAPS

Bid/Ask spread

Current Week ago
Korea Dev Bank 174/~ 152/~
Hutchison 128/~ 120/130
PCCW-HKT 175/~ 170/200
China 64/69 61/67
Indonesia 255/~ ~/260
Korea 116/120 105/~
Malaysia 125/133 117/128
Philippines ~/245 230/240

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

ASIAN BENCHMARK DOLLAR BONDS

Coupon Maturity Bid price Bid
spread

5-YEAR

------

DBS Bank 7.13 15-May-11 106.12 159

Malaysia 7.50 15-Jul-11 108.52 122

ICICI Bank 5.75 12-Jan-12 95.01 435

Petronas 7.00 22-May-12 108.45 141

Hutchison 6.50 13-Feb-13 102.57 274

Chartered Semi 6.25 4-Apr-13 95.86 422

Korea 4.25 1-Jun-13 97.89 165

United Overseas 4.50 2-Jul-13 96.30 228

PCCW-HKT 6.00 15-Jul-13 101.18 263

China 4.75 29-Oct-13 101.81 125

10-YEAR

-------

Hutchison 6.25 24-Jan-14 102.05 345

Korea 4.88 22-Sep-14 100.27 100

PCCW-HKT 5.25 20-Jul-15 89.35 342

Woori Bank 6.13 3-May-16 96.48 289

Penerbangan 5.63 15-Mar-16 102.93 133

Philippines 8.75 7-Oct-16 113.75 271

Indonesia 6.88 9-Mar-17 100.50 297

ICICI Bank 6.38 30-Apr-22 84.78 408

Petronas 7.88 22-May-22 120.10 191
(Reporting by Rafael Nam; Editing by Jacqueline Wong)