By Umesh Desai and Jeffrey Hodgson

HONG KONG (Reuters) - Bond investors should be overweighing the debt of high grade Asian companies given their attractive yields compared to investment grade government issues, an HSBC bond fund manager said on Thursday.

Sectors including Singapore financials, Hong Kong property and Korean quasi-sovereigns are most likely to outperform with credit spreads range-bound amid the ongoing subprime crisis, said Cecilia Chan, head of fixed income at HSBC's (HSBA.L: Quote, Profile, Research) albis fund management unit in Hong Kong.

"Singapore financials have faced little impact from the U.S. subprime crisis, the Hong Kong property market is influenced mainly by local factors and Korean quasi-sovereigns have government support," she told Reuters in an interview.

Chan, who oversees about $13 billion (6.5 billion pounds) in assets, is the manager of the $148.2 million HSBC Asian Bond Fund. The retail version of the fund returned 4.63 percent in the year to July 31, according to data from Lipper LIPPER, a Thomson Reuters company.

That beat the 3.99 percent return by its peer group as defined by Lipper over the same period, according to the fund tracking firm.

The fund's top holdings according to its most recent factsheet included the U.S. Treasury 3.125 percent bond due April 30, 2013 <US912828HY9=>, followed by three issues from Hong Kong's Hutchison Whampoa (0013.HK: Quote, Profile, Research) and the Philippines Republic 8 percent bond due January 15, 2016 <PH/GOVT1>.

Chan said that while corporate bonds had lower credit quality compared with government debt, their market performance often showed lower volatility compared with sovereigns.

The Hong Kong-based fund manager said she was underweight Asian sovereigns amid concerns most regional central banks have yet to overcome their inflation problems.  Continued...