By Walter Brandimarte

NEW YORK (Reuters) - Emerging debt investors were flooded this week by billions of dollars in local-currency global bonds offered by governments and companies, despite market concerns related to the U.S. subprime mortgage market.

A large chunk of the new issuance is denominated in the Brazilian real, which has gained more than 14 percent so far this year. But sovereign bonds are also being offered in other strengthening local currencies, such as the Colombian peso, the Peruvian sol and even the stable Egyptian pound.

Despite being denominated in local currencies, those bonds are more accessible to international investors because most are settled in international markets and payable in dollars.

The risk of currency devaluation, however, remains with the investor.

"The reality is that U.S. dollar sovereign debt issuance continues to decline for very good reasons and you're seeing more local debt issuance," said Jeff Grills, a fund manager with JP Morgan Asset Management in New York.

"As these economies are growing, this is not a bad thing, as long as you look at what it is relative to GDP. And you're also seeing a lot more corporate issuance, which can be good or bad depending on the quality of the issuer," he added.

Most of the deals were announced as concerns about the U.S. subprime market eased somewhat later in the week, allowing investor appetite for risk to return.

Yield spreads between emerging debt and U.S. Treasury notes, an important measure of risk aversion, were back to 165 basis points on Friday, according to JP Morgan's EMBI+ index. Spreads had jumped to 174 basis pointson Tuesday, when ratings agencies began to downgrade billions of dollars worth of subprime-related loans.

The subprime mess should continue to bring volatility to the market, but as long as it does not spread to other parts of the U.S. economy, "you will not going to have any major negative developments," said Grills.

Egypt was the first to sell on Thursday an equivalent of $1 billion (6 billion Egyptian pounds) in five-year bonds payable in dollars. The bond offered investors an yield of 8.875 percent, in the low range of the guidance provided by the leaders of the deal. For details, see

Peru said on Friday it intends to sell at least $1 billion in 2037 sol-denominated bonds to help finance a prepayment of Paris Club debt.

The paper will be offered on both local and international markets and pricing should come in about a week, after the government promotes the bonds during roadshows in London on July 17 and in New York a day later.

The Colombian capital of Bogota is also planning to sell next week an equivalent of $300 million in peso-denominated bonds, with maturities ranging from 2026 to 2028, the government said.

BRAZIL CORPORATE DEBT DELUGE

Meanwhile, companies in Brazil -- Latin America's largest economy -- are also stepping into the international market with local-currency bonds, following the same strategy of sovereign issuers.

AmBev, the Latin American operation of brewing giant InBev, is promoting a 10-year real-denominated bond to be issued next week. Market sources in Sao Paulo said the company could offer some $200 million of the paper.

Brazilian homebuilder Cyrela is coming to the market with about $269 million (500 million reais) of real-denominated notes due 2017, while Banif bank is also preparing the sale of a bond in reais, the sources added.

Government-owned Banco do Brasil, Brazil's largest financial institution, sold on Friday about $188 million (350 million reais) of 10-year bonds at a yield of 9.75 percent, market sources said in Sao Paulo.

Morgan Stanley on Thursday also reopened a real-denominated bond due in 2016, offering an additional $134 million of the issue.