"We see new deals getting printed at higher leveraged levels with lighter covenants, so we need to be vigilant," said Singapore-based Tan, ahead of the Euromoney Asia-Pacific Distressed Investing & Corporate Restructuring Summit that starts in Hong Kong on Tuesday.

"Are there signs on the horizon for a correction in the credit space? Definitely."

China's last banking crisis was in the late 1990s when years of State directives saddled lenders with soured loans and forced some $650 billion of bailouts over a decade.

Moody's cut its outlook on China's real estate market to negative in May. Goldman Sachs Group Inc turned bearish on property bonds in September, and called them the riskiest part of the Asian junk bond market last month.

Along with China real estate, Bank of America expects a "spike in activity in public bonds, particularly mining, infrastructure and offshore drilling vessels", Tham said. "Each sector has a universe of several billions of high-yield bonds outstanding. We expect a fair number of these names to transition into the distressed space and are adding resources in trading and research."

Outside of Chinese developers, Nomura is shifting its attention toward coal and iron ore producers, because their fortunes are tied to demand from the world's second-largest economy. The focus is on finding value in "cost efficient" miners and contractors, "those with a fighting chance of survival", Tan said.

Nomura lists trades in India among its notable wins in the secondary market this year. Narendra Modi's election as prime minister in May spurred confidence in India's economy, spurring an increase in the price of loans from phone operators to steelmakers, he said.

"There was a decent selloff in the loan space by European and Australian banks" in late 2013 and early 2014 before Modi's election win, Tan said. "That's one of the themes we have been involved in."

Nomura and Bank of America snapped up distressed assets in Australia when European lenders and portfolio managers cut their holdings and shifted capital back home as some assets underperformed.

Toll operator BrisConnection Management Co and Melbourne-based oil producer Nexus Energy Ltd were among companies that went into administration, stock exchange announcements show.

Strong returns spur $10b bonanza in builder bonds	Home prices decline in most Chinese cities in August