By Sam Goldfarb 

A rush to raise cash in the high-yield bond market picked up momentum Thursday, with US Foods Holding Corp., Gap Inc. and MGM Resorts International among the latest companies to complete new bond sales.

At least seven businesses rated below investment-grade by a major ratings firm began marketing new bonds on Thursday -- looking to add to a growing tally of businesses that have taken advantage of investors' improved demand for riskier debt.

Before the new sales were unveiled, this week's projected high-yield bond issuance was expected to exceed $6 billion, according to LCD, a unit of S&P Global Market Intelligence.

That comes after companies issued $15.8 billion last week -- the eighth-largest weekly total on record, according to LCD.

The coronavirus pandemic has been a catalyst for many of the bond sales, as companies facing a sharp decline in revenue try to avoid running out of cash.

After holding a call with investors in the morning, Gap issued $2.25 billion of new secured bonds in the afternoon for general corporate purposes and to repay existing debt, according to LCD.

The apparel chain -- which like most retailers has closed its North American stores -- warned on Thursday that it burned through half its cash savings, even after drawing down its entire credit line and skipping April rent payments.

MGM Resorts, which has also closed properties, sold $500 million of unsecured bonds Thursday to bolster its liquidity, according to LCD, while US Foods issued $1 billion of secured notes.

Investors' appetite for high-yield bonds is significantly greater than it was a month ago. The average extra yield, or spread, investors demand to hold speculative-grade bonds over U.S. Treasurys was 7.61 percentage points on Wednesday, according to Bloomberg Barclays data. That was down from 11 percentage points on March 23, though still up from around 3.5 percentage points in mid-February.

The yield on the benchmark 10-year U.S. Treasury note settled at 0.613%, according to Tradeweb, compared with 0.618% on Wednesday. Yields fall when bond prices rise.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

 

(END) Dow Jones Newswires

April 23, 2020 18:44 ET (22:44 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
MGM Resorts (NYSE:MGM)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more MGM Resorts Charts.
MGM Resorts (NYSE:MGM)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more MGM Resorts Charts.