HONG KONG - Asian bond spreads widened on Tuesday after narrowing for a week on revived concerns that the impact of the credit crisis would be spreading beyond the financial sector.

Trading was largely subdued, dealers said, with the focus on a $300 million bond sale by China's Nine Dragon Paper (Holdings) Ltd expected to price as early as later in the day.

The sale is being closely followed to gauge appetite for new issues, particularly those with lower investment-grade ratings. Bankers have forecast strong demand for the deal, citing what they say is hefty premiums being offered by China's largest paperboard producer.

The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion, widened to 505/515 basis points (bps) from Monday's New York close of around 490, a trader said.

"It's been a very sluggish session. We are wider than yesterday but we are not seeing a whole lot of trading," said the Hong Kong-based dealer.

A rally in global equity markets was halted on Monday after Bank of America Corp, the largest US retail lender, posted a bigger-than-expected 77 percent decline in quarterly profit.

Concerns the credit crisis is spreading beyond the financial sector were also revived after Texas Instruments Inc forecast results that would be below Wall Street estimates, despite posting a gain in profit in the latest quarter.

Asian credit spreads had narrowed by around 100 basis points in the week to Monday as US investment banks such as Merrill Lynch posted earnings that were not as bad as feared, and as earnings from US blue chips such as International Business Machines Corp also topped estimates.

The price trend appeared to pause on Tuesday.

Philippines' five-year credit default swaps - insurance-like contracts that protect against defaults and restructuring - widened by around 5 basis points to 190/200 from Monday's level, a Manila-based trader said.

The country's cash bonds, among the most actively traded in Asia outside Japan was flat in very quiet trade.