By Joshua Franklin
NEW YORK (Reuters) - U.S. casino operator Wynn Resorts Ltd
The offerings indicate investor appetite for risk is gradually returning in the market for new corporate debt rated below investment grade.
The so-called high-yield market has been supported by the Federal Reserve's pledge to backstop the investment-grade market, according to Bill Zox, chief investment officer of fixed income at Diamond Hill Capital Management.
"It opens up the new issue market on the investment-grade side, which then gives high-yield investors some confidence that the market can absorb new issuance," said Zox.
Wynn, which issued a warning on Feb. 28 about the potential impact of the coronavirus on earnings, sold $600 million in new debt maturing in 2025, upsized from the $350 million the company originally planned to raise.
The company is paying interest of 7.75%, compared with 5.125% in a $750 million deal for bonds maturing in 2029, which was done in September.
NCR sold $400 million in new debt maturing in 2025 at a yield of 8.125%, a higher borrowing cost than the 6.125% yield on the $500 million in 2029 bonds it agreed to in August.
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Nevertheless, the high-yield market is still seen as off limits for smaller companies or borrowers with lower credit ratings.
"You're going to see larger well-known issuers accessing the market. I still don’t expect very low-quality or much smaller issuers to access the new issue market," Zox said.
Shares in Wynn and NCR closed up 7.3% and down 4.3% respectively.
(Reporting by Joshua Franklin in New York; Editing by Peter Cooney)