HONG KONG -- Asian debt spreads widened for a second consecutive session on Wednesday as concerns over weakening corporate earnings worldwide reinforced fears of a potentially steep and prolonged global economic slowdown.

From US industrial conglomerate Tyco International to US auto maker General Motors or Singapore Telecommunications, investors are bracing for a wave of grim news on the corporate earnings front.

Trading volumes in Asian credit markets continue to be depressed, as some parts of the market such as high-yield attract few trades, making a short-term recovery unlikely, analysts said.

"With rotting credit sentiment being ploughed under by accelerated investment deleveraging and margin calls, we recommend participation be limited to a view from the bleachers," BNP Paribas credit analyst Brett Williams said in a client note.

The Asia ex-Japan iTRAXX investment-grade index a key measure of risk aversion, widened by as much as 30-40 basis points (bps) to 370 in early trade before tightening to about 350, said a Hong Kong-based trader.

Trading continues to be concentrated towards sovereign credits as concern over Asia's slowing economies dominates.

Hong Kong and the Philippines were the latest to downgrade their economic growth forecasts for the year, while a South Korean government body said it expects 2009 growth in Asia's fourth-largest economy to hit a six-year low.

South Korea also reported its smallest increase in job growth last month since February 2005.

Sovereign spreads largely widened as a result. South Korea's five-year credit default swaps (CDS) -- insurance-like contracts that protect against defaults and restructuring --moved out by about 10 bps to 320.

The Philippines' five-year CDS widened by about 30 basis points to 420. The country also said it expects its budget deficit to reach about $2.1 billion next year, much higher than first estimated.

Indonesia remained one of the clear underperformers, with its five-year CDS widening by about 70 bps to 675. The steep widening reflects investor concerns about its current account deficit and its ability to fight off the economic slowdown, according to traders.