Some $1.4 billion in junk bonds were up for grabs Wendesday as speculative-grade companies continue to capitalize on renewed interest in riskier assets to secure financing that has evaporated elsewhere.

Natural-gas producer Chesapeake Energy (CHK) sold $1 billion of new senior notes after increasing the deal from an initial target of $500 million. Yet, the company offered a discount on the new debt, 95.071 cents on the dollar, so it ended up pocketing just over $950 million. Meanwhile, Inergy LP (NRGY), which sells propane and leases propane supplies, bought home $203 million by selling its six year bonds at a discount.

The willingness of investors to buy into new junk bond deals has helped ease funding concerns for corporates at the top end of the speculative-grade ratings spectrum.

It has also allowed speculative-grade borrowers to sell over $4.2 billion of bonds already in January, making it the busiest month for high-yield issuance since July 2008, when companies raised more than $3.8 billion in the market, according to data provider Dealogic.

The yields on the deals ranged from 10.625% on Chesapeake's bonds, rated Ba3 by Standard & Poor's, to 11% on Inergy's debt, rated B1. The yields are less than what the companies would have paid late last year, but the cost of borrowing is still at exceptionally high.

Indeed, there is incredible demand for more stable, high-yield names, according to James C. Camp, managing director and portfolio manager at Eagle Asset Management.

"The names that are coveted in the new issue market are getting oversubscribed five, six, even seven times," he said.

Intelsat is another company looking to take advantage of this demand when it sells $200 million in 8.875% bonds at a discount - around 88 cents on the dollar - to yield around 11.75%. Order books on that deal are open until 5 p.m. (EST).

Also, Landry's Restaurants Inc. hoping to find favor with investors for $270 million in new bonds, which were announced last week and are still marketing, according to KDP Investment Advisors.

Most of the new junk bond sales this year have seen reserve enquiry from investors, meaning that most of the order books were practically filled by the time the deals were announced.

But while investor demand for new issues has picked up, all new bond sales this year have priced at significant discounts to par value. The low prices mean that new bond deals have traded above their issue prices in the secondary market.

"Ninety cents on the dollar is the new par," said one syndicate official.

As with Inergy, proceeds of Chesapeake's bonds 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.

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

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