Risk Appetite Returns for Junk Bonds --- Issuance of Nearly $4 Billion Is the Most Raised in One Week Since June
Junk-bond investors snapped up nearly $4 billion of new issuance this week and pushed prices higher when the bonds traded, marking one of the best weeks in this market since last year.</br></br>This is the most raised in one week since June 2008, according to data provider Dealogic.</br></br>On Thursday, strong demand allowed computer-disk manufacturer Seagate Technology to place $430 million of junior 10% notes at a discount of 95.32 cents for a lower-than-expected yield of 11.25%.</br></br>The Seagate deal indicates investors are becoming more comfortable with risk, a positive sign for the high-yield market and the companies that depend on it for financing. While Seagate is rated at the top of the speculative-grade spectrum, the junior, or second-lien, notes mean they are further down in the repayment pecking order than other recent note offerings.</br></br>Even with the lower-than-anticipated yield, buyers bid up the new Seagate notes, which were trading higher at 99.25 cents on the dollar in the secondary market on Friday.