By Ditas Lopez Of DOW JONES NEWSWIRES

SINGAPORE -(Dow Jones)- A recent boom in international bond offerings out of Asia is showing signs of fatigue.

Asia delivered a record amount of issuance in October. But growing concern about the durability of the economic recovery and less-than-stellar outcomes of recent bond offerings--particularly from canary-in-the-coal-mine-type high-yield issuers--are making investors more circumspect.

Borrowers are still lined up to do deals, ready to sell as much as $10 billion of bonds by the year end by some estimates, but market players say some offerings will likely be put on ice.

"The pipeline is still fairly big but I suspect there's going to be some syndicate desks who are a little bit less confident than they were four weeks ago and maybe they will be steering people to next year," said Damien Wood, head of credit research for Asia ex-Japan at Credit Suisse.

In the past few days, yields on Asian international bonds and the cost of insuring them against default or restructuring have risen on worries that a global economic recovery will be slow in coming, threatening to halt the momentum of spread tightening seen earlier in this year.

After breaching psychological support at 100 basis points on Oct. 15, the Markit iTraxx Asia ex-Japan investment-grade credit default swap index has increased, finishing at 118.5 basis points Friday.

What's more, many recent issues have fallen in the secondary market, leaving investors wary of upcoming deals and seeking higher risk premiums.

There have also been telling signs in the primary market.

Indonesian coal producer PT Bumi Resources (BUMI.JK), for example, had to pay up to get a deal done. It priced $300 million in seven-year global bonds early Friday at a 12% yield. The amount raised was at the low end of the $300 million-$500 million targeted by the issuer and the yield was at the high end of 11.5%-12.0% guidance.

At twice the minimum size offered, subscription for the bond, which is callable after four years, paled in comparison to the multiple times oversubscription seen on previous deals.

Similarly, Chinese developer Agile Property Holdings Ltd. Wednesday priced its seven-year bonds callable after four years at 10.5%, on spot with official guidance but higher than a 10.0% yield it had originally pitched to investors.

This is a stark change from last month, when the market was booming. A $500 million bond Sri Lanka sold in mid-October, for example, was around 14 times subscribed.

In another potential blow to confidence in junk-grade credits, Fitch Ratings and other analysts said Indonesian shipping company PT Arpeni Pratama Ocean Line Tbk failed to pay a semi-annual coupon on its 8.75% 2013 notes due 2013. A default will occur if it doesn't pay the interest after 30 days. The company wasn't immediately available to comment.

Analysts and other people in the market believe that buyers are just taking a breather after absorbing the nearly $10 billion of deals in October and that they can be expected to return to the market soon.

Investors say they don't need to lighten their portfolios to make room for the next Asian issue. And there are positives for the market: default rates are expected to fall globally and in Asia next year, while monetary policy rates will likely remain low.

"We'll have a situation where people are very yield hungry and will continue to seek to generate better returns by chasing yield," said Wood.

- By Ditas Lopez, Dow Jones Newswires; +65-6415-4044; ditas.lopez@dowjones.com

(END) Dow Jones Newswires

11-06-09 0546ET