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Ten corporate bond issuers in market despite weak tone

By Davide Scigliuzzo

NEW YORK, Aug 16 (IFR) - A slightly weaker tone in the broader markets did little to deter five junk-rated and five high-grade issuers from pressing ahead with new dollar deals on Tuesday.

The investment-grade CDX index and US stock indices were slightly weaker on Tuesday following weak US data and a statement from New York Fed President William Dudley that the US central bank could raise interest rates as early as next month.

The reaction across the US junk bond market was more muted, with the high-yield CDX index only a tenth of a point lower in price and the asset class's two main ETFs (Shenzhen: 395013.SZ - news) also a touch lower, but generally outperforming equities.

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Junk-rated bond issuance has largely been driven by opportunistic refinancings as companies seek to tap into a strong bid for US corporate paper.

This is the case for both movie theater advertising company National CineMedia (NasdaqGS: NCMI - news) and casino operator MGM Resorts, which are in the market to refinance outstanding bonds.

CineMedia (B2/B) is looking to raise US$250m through a new 10-year non-call five talked at a yield of 5.75%-6%, while MGM (B1/BB-) is eyeing a bigger US$500m 10-year bullet, with talk of 4.50%-4.75%.

It (Other OTC: ITGL - news) is a similar story for Boise Cascade, a B1/BB- rated wood products manufacturer, which is raising US$300m through an eight-year non-call three to redeem outstanding 2020s. Price talk has been set at 5.75% area.

"If you have got paper that needs to be refinanced you come to market now," said one portfolio manager.

Elsewhere in the oil space, Permian Basin producer Parsley Energy (B3/B-) announced a US$200m reopening of its 6.25% 2024s with talk of 101.5-102, adding momentum to the uptick in issuance from sub-investment grade E&P names.

The company will use proceeds from the sale, which was launched in conjunction with an equity offering, to finance the acquisition of oil and gas interests in the Texas county of Glasscock.

Lower down the credit spectrum, timeshare operator Diamond Resorts announced price talk of 7.75% area and 10.75% area on the secured (B1/B+) and unsecured (Caa1/CCC+) tranches of its US$1bn bond offering, which will help finance private equity firm Apollo's takeover of the business.

The high-grade market is also active with European lenders Societe Generale (Swiss: 519928.SW - news) and Standard Chartered (HKSE: 2888.HK - news) looking at the US dollar market for new funding.

Investors piled into new dollar deals Tuesday from the two banks, showing plenty of demand for the latest offerings from overseas financials.

Elsewhere in the high-grade space, utility Entergy, rated Baa3/BBB, raised US$750m through a 10-year bond that was priced at T+140bp, 20bp tight to initial price thoughts.

REIT UDR Inc, rated Baa1/BBB+, launched a US$300m 10-year at T+137.5bp, the tight end of guidance of T+140bp area (+/-2.5bp).

Investment-grade rated ETrade Financial is also approaching investors with a US$400m perpetual non-call 10-year preferred (Ba3/BB-), that was launched at 5.875%. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby and Shankar Ramakrishnan)