Malaysia - Southeast Asia's biggest sovereign debt risk? Southeast Asia sovereign CDS performance: By Umesh Desai HONG KONG, Jan 12 (Reuters) - The cost of insuring Malaysian sovereign debt has risen the most this year compared with that of its Southeast Asian peers as state investor 1MDB's financing woes grew and concerns deepened about the prospects for the net oil exporter's petroleum revenues. Malaysia's five-year credit default swaps, which investors use to hedge against risks of debt default, have jumped some 40 basis points in the first two weeks of 2015 to 142/148 bps. That compares with the performance of Malaysia's nearest peer Thailand, whose CDS have risen 10 bps, and Indonesian CDS, which have gained 14 bps. While global rating agency S&P says 1MDB's failure to meet a loan obligation has little impact on the company's bonds, investors are worried about the wider implications for the country's sovereign rating. About 45 percent of Malaysian sovereign debt is owned by foreigners. "Onshore participants are sceptical of the name, but they feel it is too strategically important and will be bailed out," said a Singapore-based credit trader, referring to the indebted and loss-making 1MDB. "You will upset lot of people including (Malaysia's) strategic partners in the Middle East if a default happens." The concerns first emerged when oil prices started to slide, a downdraft that has taken them to their lowest levels since April 2009. Malaysia stands at A3/A-/A-, a notch higher than Thailand's Baa1/BBB+/BBB+ and three to four steps above Indonesia's Baa3/BB+/BBB-.