SINGAPORE (Dow Jones) – With just a few days left before May 10 national elections, the Philippine government's dollar-denominated bonds are trading weaker and investors are buying default insurance to price in growing political risk.

With politics rather than economics currently taking center stage in the Southeast Asian archipelago, the outcome of the country's first nationwide computerized vote will dictate whether Philippine sovereigns – a benchmark for Asian high-yield bonds – will uncharacteristically underperform the rest of the region.

Market participants have reason to be cautious. Tests found that more than 76,000 memory cards from automated voting machines failed to read ballots, authorities said Tuesday, a major technical flaw that has heightened fears of fraud or even electoral failure, which could lead to civil unrest.

Racing against time, election officials said they'll replace the defective memory cards. Another test run is scheduled for Thursday.

A spokesman for President Gloria Arroyo, told Agence France Presse that the vote may need to be delayed because of technical problems.

While that seems unlikely, at the very least "there is more uncertainty now," said Rajeev De Mello, a fund manager at Western Asset Management in Singapore, who said he will avoid Philippine bonds for now. "With the timing of the voting now uncertain, it does worry me a bit."

By Wednesday morning, the price of long-dated Philippine sovereign bonds was down by as much as 1.5 points. Credit default swaps on Philippine five-year sovereign debt were trading at spreads of 185-191 basis points, up around 15 basis points from Tuesday.

That was slightly worse than the broader Asian credit market: Spreads on the Markit iTraxx Asia ex-Japan's investment-grade CDS index also were about 10 basis points wider Wednesday, due to spillover concerns from Greece's ongoing sovereign debt problems.

The aim of nationwide automated voting was to shorten the vote-tallying process and eliminate cheating. But there are concerns that the system may prove difficult to implement in a developing nation composed of some 7,100 islands.

More than 50 million Philippine voters will choose a new president and vice president, 12 senators, and thousands of lower-level government positions in this year's elections.