Strong demand for Asian bonds has allowed Panva Gas Holdings to increase the size of its first global bond offer by 25 per cent and South Korea to contemplate pricing its latest sovereign bond at a tighter spread than initially planned. Panva Gas, which is raising money to expand its piped gas and liquefied petroleum gas businesses in the mainland, boosted the size of the seven-year bonds to US$200 million from $150 million and fixed the yield at 8.25 per cent, according to a term sheet sent to investors. The initial price guidance was for a yield between 8.375 and 8.5 per cent, although this was tightened to 8.25 to 8.375 per cent this week. The bond was priced at par, meaning the coupon is also 8.25 per cent. Sources said the offer, brought to market by Merrill Lynch and Morgan Stanley, attracted a massive US$1.5 billion worth of orders. They said it would have sent a positive signal to other small, but growing, Chinese firms, which are increasingly looking to the international capital markets for funds as government curbs on lending make domestic financing harder. Growth Enterprise Market-listed Panva Gas is in the middle of an aggressive expansion in China, where demand for piped natural gas has been intensified by government initiatives to reduce emissions of carbon dioxide and other pollutants. Last month, Panva said it had sealed its biggest acquisition to date - a 50 per cent stake in a Jilin gas project for 395 million yuan. Meanwhile, the US$1 billion Korean sovereign bond had attracted more than $3 billion worth of demand by late yesterday, which prompted a tightening of the price guidance to the '85 basis point area' above the 10-year US Treasury from the initial 87 basis point area, sources said. The use of the word 'area' usually suggests plus or minus two basis points and one source said late last night that the yield was 'very likely' to be fixed at 83 basis points over Treasuries. The Korean bond, which is jointly arranged by Barclays Capital, Citigroup, Deutsche Bank and JPMorgan, was due to price during New York trading hours yesterday. With US data recently being on the weak side, investors did not worry much about inflation and consequently thought interest rates would have to rise less than initially assumed, said Ben Yuen, head of Asian fixed-income research at First State Investments. 'This is a good environment to buy high-yield bonds,' he said. Issues this week by Malaysian casino operator Genting and Telekom Malaysia revealed similar demand, with the latter's US$500 million offer 8.5 times oversubscribed. Sources said the next Hong Kong issuer to take advantage of the favourable environment would be Cathay Pacific Airways, which will kick off the road show for its Singapore-dollar bond offering in Singapore next week. Sources earlier said Cathay was looking to tap about US$150 million for fleet expansion, with Standard Chartered Bank as the arranger.