Nov. 10 (Bloomberg) -- Investors should buy speculative- grade Asian bonds because yield premiums are above historical averages and are set to fall, according to Gregor Carle, Fidelity International’s fixed-income investment director.

“This period of supply we have had is not going to be a protracted period,” Carle said in an interview at Bloomberg’s Hong Kong office yesterday. “Things will settle down, the market will get over its indigestion and Asian high-yield bond spreads should tighten.”

Companies in Asia outside Japan sold a record $51 billion of bonds in dollars, euros and yen this year, more than triple the $16 billion they raised in the same period of 2008, according to data compiled by Bloomberg. Borrowers turned to bonds as banks curbed lending in the wake of the credit market freeze trigged by Lehman Brothers Holdings Inc.’s bankruptcy.

High-yield debt, also known as junk or speculative-grade, is rated below BBB- at Standard & Poor’s and Baa3 at Moody’s Investors Service, and returned an average 76 percent this year, according to Merrill Lynch & Co.’s Asia Dollar High-Yield Corporate index.

Fidelity International’s Asian High-Yield Fund has about $350 million of net assets.

While the extra yield investors demand to hold junk debt rather than government securities narrowed to 809 basis points from 2,419 basis points this year, it is above the five-year average of 345 basis points between January 2003 and December 2007, the index shows. A basis point is 0.01 percentage point.

Dollar Sales

Agile Property Holdings Ltd., the Hong Kong-based real estate developer, and Indonesian coal producer PT Bumi Resources were the last Asian high-yield issuers to sell dollar bonds, Bloomberg data show. Agile sold $300 million of notes due in November 2016 priced to yield 10.5 percent, and Bumi raised $300 million from 12 percent notes due in 2016.

Agile’s notes were last quoted at 99.75 cents on the dollar to yield 10.2 percent, ING Groep NV prices on Bloomberg show.

Global corporate bonds sales are set to slow toward the end of the year amid fading demand from borrowers that have met their financing needs for the year, according to Carle.

“Yields are higher just now and these wider spreads are a great opportunity for investors because they will correct,” he said in reference to Asian high-yield bonds.

To contact the reporter on this story: Shelley Smith in Hong Kong at ssmith118@bloomberg.net

Last Updated: November 9, 2009 19:38 EST