HONG KONG: Asian balance sheets remain healthy and economic growth resilient despite the global credit crunch, but by one market measure, Asian bond issuers are an even worse risk than they were during the financial crisis a decade ago.

The credit problems that originated in the U.S. housing sector have led to much smaller asset write-downs in Asia than in Europe and the United States, yet the cost of insuring against Asian debt defaults, as measured by credit default swaps, has reached record high levels.

“Asian borrowers are asking: Whats subprime? Why do I care? Whats going on in New Jersey shouldnt impact the strength of my balance sheet, ” Fergus Edwards of UBS said.

One big problem, analysts say, is the relative lack of liquidity in Asian debt, compared with that in more developed European or U.S. markets, although hard data are hard to find in the opaque, over-the-counter credit default swaps market.

According to one default swap trader, global investors, when offered a choice between similarly rated issues, will more often than not plump for U.S. or European bonds over Asian debt because those are easier to sell quickly if the need arises. “Fundamentals-wise, Asia is definitely stronger than the U.S. or Europe,” said the trader, who spoke anonymously because he was not authorized to speak to reporters. “But people still prefer to be in European or U.S. names because they are much bigger. Market liquidity is bigger and volumes are larger.”

That helps explain why levels of Asian credit default swaps - which are priced in terms of percentage points above the London interbank offered rate - are well above the levels seen elsewhere in the world. The levels are also above those at the time of the Asian financial crisis, making it prohibitively costly for Asian issuers to raise money from overseas borrowers.

Any recovery in the regions credit markets depends on an easing in a global liquidity crunch in which Asia has played little part, compounding the frustration felt by investors.

Asian bankers said that clients were complaining about having to pay for U.S. problems.

“Asia is still strong,” said the head of Asian debt capital markets for a major U.S. investment bank, who asked not to be identified discussing conversations with clients. “Credits are improving, economies are improving, balance sheets are improving, therefore borrowing costs should be improving.”

The iTraxx Asia high-yield index excluding Japan, which tracks the cost of insuring against the default of 20 noninvestment-grade names like Hynix Semiconductor in South Korea, hit a record at about 6.60 percentage points last week.

That means that insuring $10 million in the underlying debt over five years would cost an investor about $660,000, more than triple the $210,000 paid in mid-October, when bond spreads started to shoot up as a result of the crisis.

In comparison, the iTraxx crossover index, which measures 50 similar “junk”-rated credits in Europe, hit about 5.80 percentage points last week.

Put another way, the iTraxx index for Asia is implying a five-year default probability of at least 30 percent, according to some calculations, or that more than six names will default in that period.

Many see no sense in that.

According to Standard Poors Ratings Services, none of the 12 defaults seen so far this year has come from Asia. Furthermore, Asia has seen only one rated issuer default in each of the previous three years, and of the 114 rated issuers the agency sees at risk of defaulting, only three are Asian - G Steel and the paper producer Advance Agro from Thailand, and the Nasdaq-listed semiconductor firm ASAT Holdings from Hong Kong.

“Its a very difficult time for investors,” said Clifford Lau at Pramerica Investment Management in Singapore. “The problem is that we are not trading at individual credit fundamentals. Its frustrating.”

“There is a lot of value in the Asian fixed income market already, but there are so many uncertainties out there making investors only look to sell their bonds rather than pick up risk at the moment,” Lau said.

With no end in sight for the global financial crisis, analysts say it will be difficult for Asian markets to recover on their own, even if economic growth in the region is expected to outperform that in Europe and the United States.

“We are not that exposed to subprime-related risk, but we are talking about global risk reduction, and no region or asset class is being spared,” Lau said.

WASHINGTON—Ford Motor Co. () said Friday it would recall 3.6 million passenger cars, trucks, sport utility vehicles and vans to address concerns about a cruise control switch that has led to previous recalls based on reports of fires.

Ford said the recall covered more than a dozen vehicle models built from 1992-2007. The company said it was responding to concerns from owners about the safety of their cars and questions about the speed control deactivation switch in the vehicles that is powered at all times.

The Dearborn, Mich.-based automaker previously had recalled nearly 6 million vehicles beginning in January 2005 because of engine fires linked to the cruise control systems in trucks, SUVs and vans.

“Customers remain concerned about the long-term durability of the speed control system and about the safety of their vehicles,” said Ford spokesman Dan Jarvis.

He said the automaker had received “a few reports of fires” in Ford Crown Victoria passenger cars prior to the recall. He did not have a precise number.

The recall involves the following vehicles: 1998-2002 Ford Ranger, 1992-1997 Lincoln Town Car, 1992-1997 Ford Crown Victoria, 1992-1997 Mercury Grand Marquis, 1993-1998 Lincoln Mark VIII, 1993-1995 Taurus SHO, 1999-2001 Ford Explorer and Mercury Mountaineer.

Also covered are the 2001-2002 Ford Explorer Sport, 2001-2002 Ford Explorer Sport Trac, 1992-1993 E150-350 vans, 1997-2002 E150-350 vans, 1993 Ford F-Series pickups, 1993 Ford Bronco, 1994 Mercury Capri, 2003-2004 Ford F-150 Lightning, and 1995-2002 Ford F53 motor homes.

An additional 177,000 vehicles in Canada, Mexico and Europe are covered by the recall.

Owners will begin receiving recall notices on Aug. 13. Dealers will install a fused wiring harness into the speed control electrical system or replace the deactivation switch it its found to be leaking.

Owners with questions about the recall can contact Ford at (888) 222-2751.

SYDNEY: Oil fell $1 toward $100 a barrel on Monday, as funds sought to lock in more first-quarter profits and the top exporter, Saudi Arabia, reassured consumers of its plans to increase supply in the coming years.

U.S. light crude for May delivery slid $1.01 to $100.83 a barrel in Globex electronic trading in Europe, after hitting an intraday low of $100.02

Prices fell almost $9, about 8 percent, last week as investors fled commodities.

London Brent crude dropped 83 cents to $99.55.

“I think theres still a lot of profit-taking in the market, and that is pushing down oil prices,” said Tetsu Emori, a Tokyo-based fund manager at Astmax. “The U.S. dollar is also bouncing back from major currencies, so thats adding to the downward pressure.”

Saudi Arabia said Sunday that it was working to expand its oil production and refinery capacity in order to maintain world economic growth, reaffirming its vow to invest tens of billions of dollars in new wells and infrastructure.

“The kingdom will work with OPEC countries, other producers and consuming countries toward oil market stability and to avoid the effects of harmful speculation,” the Supreme Council of Petroleum and Mineral Affairs said in a statement after a visit by Vice President Dick Cheney.

On Monday, Cheney, who had met King Abdullah of Saudi Arabia, said the kingdom had kept its promise to increase oil production capacity over the past three years.

Washington has said that it wants Saudi Arabia to help raise production by the Organization of Petroleum Exporting Countries to ease prices, but OPEC has resisted pumping more crude because of fears of weakening demand.

A tumbling dollar and geopolitics in the Middle East have helped fuel the recent oil rally.

Other commodities have also hit record highs recently as investors fled stock markets and took refuge in dollar-denominated assets.

But oil has fallen sharply from its record of $111.80 on March 17, as investors, worried about the outlook of the global economy, cash in on recent records.

Chakib Khelil, president of OPEC, said on Saturday that oil prices would range between $80 and $110 a barrel for the rest of 2008.