HONG KONG -- Asian risk premiums rose on Tuesday amid renewed investor jitters about earnings prospects and Fannie Mae's vulnerability to short-term debt refinancing risk.

Spreads on insuring South Korea's sovereign debt widened after Fitch cut its outlook on Asia's fourth largest economy to negative from stable.

"The revision to Korea's outlook reflects concerns that the de-leveraging of the banking system may contribute to an erosion of the sovereign's external credit strengths," said James McCormack, head of Asia sovereigns at Fitch.

He said the deterioration would be deeper if it were accompanied by central bank interventions in the currency market to support the exchange rate.

South Korean five-year credit default swaps (CDS) -- insurance-like contracts that protect against defaults and restructuring -- moved out to 310 basis points (bps) from Monday's 280 bps.

Meanwhile, the broad market was weaker as investors worried about how institutions like Fannie Mae, the largest provider of fucnding for US home mortgages, were depending more on short-term debt to bankroll its business.

Fannie Mae's short-term borrowings rose to 33.7 percent of debt outstanding as of September from 29.4 percent in December.

Risks of using more short-term debt issues include rising interest rates and the possibility the company may not draw enough demand to refinance maturing securities, the firm said.

In Asia, the Asia ex-Japan iTRAXX investment-grade index, a key measure of risk aversion, widened by 5-6 bps to 330/360 bps. It is still way below the record high of just under 650 bps hit in late October.

The high yield benchmark moved out by 10-15 bps to 980/1080 bps.

Analysts are still trying to figure out how China's 4.0-trillion yuan ($586 million) government spending package will affect its banking system.

China announced the plan on Sunday in a bid to boost domestic demand. Even so, its five-year CDS spreads widened by 5 bps to 125 bps.

Also weighing down on investors' sentiment were the earnings outlook for a raft of companies from General Motors to Goldman Sachs in a harsh economic environment.

And although Fitch lowered the outlook on Malaysia's sovereign rating to stable from positive, its five-year CDS was unchanged at 210/220 bps.

"There are no concerns about Malaysia's external position. It has never had an external problem," said a Hong Kong based fund manager.