Chesapeake Energy Corp. (CHK) has doubled the size of its planned sale of junk bonds, taking the size of the deal to $1 billion, according to one investor looking at the transaction.

The deal was raised from the initial target of $500 million thanks to strong interest from investors, the investor said.

Chesapeake is expected to sell the bonds at a discount to par value to give a coupon of 9.5% and a 10.5%-10.75% yield, the investor said.

In a note to clients earlier Wednesday, analysts at KDP Investment Advisors said they wouldn't be surprised if the deal got upsized given the recent strength of the new issue market.

Chesapeake is one of three speculative-grade companies looking to raise debt in the junk bond market Wednesday as they capitalize on improved demand to raise cash to repay debt and fund their operations. Also on offer, is $200 million of bonds apiece from both Intelsat and Inergy Lp (NRGY).

Chesapeake is a well-known name in the junk bond universe. It was last in the market in May 2008 when it sold $800 million of 7.25% bonds, according to Standard & Poor's. These bonds trade at around 85 cents on the dollar, MarketAxess shows.

Proceeds of the deal will be used to repay a portion of the firm's revolving credit facility. As of Monday, the outstanding balance on Chesapeake's revolver was $3.45 billion, according to Standard & Poor's Leveraged Commentary & Data.

The deal is expected to price later Wednesday through lead managers Deutsche Bank, Banc of America, Credit Suisse, Goldman Sachs, Morgan Stanley and Wachovia.

-By Kate Haywood, Dow Jones Newswires; 201-938-2348; kate.haywood@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.