HONG KONG - The cost of protection on debt for countries such as Pakistan and Thailand remained elevated on Thursday amid growing concerns over political risk in the region at a time of already difficult economic conditions.

Asian credit markets are facing a tough month. Prior worries about high inflation and slowing global economic growth are being accompanied by financial turmoil in markets such as South Korea and political instability from Karachi to Bangkok.

Issuers are also gearing up for a potentially large number of sales in September. South Korea on Thursday scheduled a roadshow for next week for the sale of 10-year dollar sovereign bonds, amid expectations it could raise as much as $1 billion.

These issuers will have to pay up, traders said, with the potential of further re-pricing in secondary markets.

Among issues, Wing Hang Bank's $225 million in perpetual bonds were sold at a coupon yield of 9.375 percent on Wednesday, traders said. The new debt rose to 100.5, after being sold at par.

Some analysts caution against too much pessimism, given that current spreads offer some attractive entry points for investors willing to take the chance.

"Talk of another Asian crisis is unwarranted and unjustified. We believe this nascent Asian risk premium looks like a good target to trade," Brett Williams, a credit analyst at BNP Paribas, wrote in an email to clients.

Williams also noted that unlike a decade ago, Asian countries have a reserve chest of nearly $4 trillion dollars, providing "fire power" for some of these economies. - Reuters