Emerging debt-Asian bond spreads tighten; focus on Indonesia

HONG KONG, June 16 (Reuters) - Asian sovereign and corporate bond spreads tightened for a second straight session on Monday after a moderate rise in U.S. core consumer prices data eased some of the inflation worries that had recently hit the region's debt.

Trading was quiet ahead of earnings results this week from U.S. financial firms such as Goldman Sachs (GS.N) and Morgan Stanley (MS.N), amid worries the lingering global credit crisis will continue to pressure earnings in the sector.

Still, the pipeline of potential bond sales from Asia remains strong, bankers said. Indonesia is due to meet investors in London and New York later on Monday, in the last day of a roadshow for a deal that could reach as much as $2 billion.

"It's deadly quiet today. People are waiting for the results from the U.S. brokerages, and it will be hard to get any big movements ahead of that," said a Hong Kong-based trader.

The iTRAXX Asia ex-Japan high-yield index ITAHY5UA=GFI, a key measure of risk aversion, narrowed by about 10 basis points (bps) to 505, while the equivalent investment-grade index ITAIG5UA=GFI narrowed by 3-5 bps to 127/130.

Spreads tightened after data on Friday showed the core U.S. consumer price index, which excludes volatile food and energy costs, edged up 0.2 percent in May, easing some of the inflation concerns that have led central banks around the world to respond with interest rate hikes. [ID:nN13434921]

But trading was quiet. Philippines' debt, usually among the most widely traded in Asia excluding Japan, little changed.

The Philippine economy is likely to grow 5.3 to 5.9 percent in the second quarter from a year earlier, picking up from the first quarter on higher farm output and a recovery in consumer spending, the country's economic planning chief Augusto Santo told Reuters on Monday. [ID:nMAN141559]

But interest rates in the Philippines are also likely to rise on account of inflationary pressures, the country's Finance Secretary Margarito Teves said. [ID:nSP132800]