Asian debtors' rising risk

Borrowers in Asia are seen as the least creditworthy relative to their global peers in almost a year on signs of faltering growth in China.

The Markit iTraxx Asia index of credit-default swaps traded as much as 20 basis points higher than the average of four others from around the world this month, the biggest premium since June, according to data provider CMA.

As recently as March, Asian borrowers were seen as better credits than the rest of the world.

Confidence in Asia is being dented by slowing growth in the region's biggest economy, where manufacturing is contracting for the first time in seven months. That contrasts with optimism about a US economic revival and tumbling sovereign bond yields in Europe.

Investors soured on China's outlook in a global poll this month, with the nation seen as offering the worst opportunities in the next year after the European Union.

"There are big questions over China's ability to keep growing at its past rapid pace," said Scott MacDonald, head of research at MC Asset Management Holdings in Connecticut, which has about US$600 million of assets. "China's manufacturing numbers indicate a slowdown more in line with recessional behaviour than growth, causing some alarm."