Emerging debt-Asian bond spread flat; on hold for new issuance

HONG KONG, Aug 28 (Reuters) - Asian bond spreads remained range-bound on Thursday as comfort over surprisingly strong U.S. durable goods orders was offset by an expected heavy slate of new issuance starting as early as next week.

Philippines' sovereign bonds were flat as well, despite weaker-than-expected economic growth in the second quarter, as investors wait for a central bank meeting later in the day that is widely expected to result in an interest rate hike.

The iTRAXX Asia ex-Japan high-yield index ITAHY5YIA=, a key measure of risk aversion, remained range-bound at 558, while the equivalent investment-grade index ITAIG5YIA= was at around 160.

"The market is quite stable. We haven't seen much change over the past two days, but the market has drifted quite a bit wider recently," said a Hong Kong-based trader.

Helping support sentiment was data on Wednesday showing new orders for long-lasting U.S. manufactured goods jumped a surprising 1.3 percent in July, helping relieve concerns about the world's largest economy. [ID:nN27443202]

But expectations for new debt sales after the U.S. Labor Day holiday on Monday kept spreads in the region from tightening.

"We should see a heavy calendar of new issuance after Labour Day. The main focus is on South Korea's sovereign," said the Hong Kong-based trader.

South Korea is planning a $1 billion sovereign bond sale that is expected to establish a benchmark for others in the country, including banks and state agencies, looking to issue bonds.

Other potential issuers include Hong Kong's Wing Hang Bank (0302.HK: Quote, Profile, Research) and India's Axis Bank (AXBK.BO: Quote, Profile, Research).