Junk Bond Sales Rise to $2.8 Billion as Rates Fall (Update1)

[Joanne98]

By Gabrielle Coppola and Bryan Keogh

March 28 (Bloomberg) -- U.S. high-risk, high-yield bond sales rose to $2.8 billion this week, the most since November, as the rates charged to junk bond issuers fell the most in five years.

Steel Dynamics Inc., the third-largest U.S.-based steelmaker, and newsprint maker AbitibiBowater Inc. were among four high-yield debt issuers as speculation grew that an end may be in sight to the slump in credit markets. The sales capped a quarter in which junk offerings fell 75 percent from the same period last year. Overall U.S. corporate bond sales fell 33 percent so far this quarter, about the slowest start in eight years.

``These were the first baby steps in the new issue market trying to reopen,'' said Manny Labrinos, an investment manager and the head of corporate bond trading at Nuveen Investment Management in Los Angeles, which manages $2 billion of fixed- income assets.

The average yield investors demand over U.S. Treasuries for junk bonds fell 46 basis points to 794 basis points, the biggest weekly drop since April 2003. The high-yield market had been all but shut down in the quarter as spreads hit a five-year high of 862 on March 17.

Investors took heart from the Federal Reserve's role in shepherding a takeover of Bear Stearns Cos. by JPMorgan Chase & Co. because it showed the government may provide a backstop against a market freefall. That helped alleviate concerns that losses that began with a slump in subprime mortgages may continue to roil credit markets.

Steel Dynamics, Harrah's
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBv1zT3A05c0&refer=worldwide