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Newswire

US Corp Bonds-Market weaker after record GM sale

By Dena Aubin

NEW YORK, June 27 (Reuters) - U.S. corporate bond yield spreads wrapped up the week unchanged to slightly wider on Friday and trading slowed to a trickle after the second- heaviest week of corporate debt sales this year.

"There's just very light trading -- probably one of the lightest volume days we've seen in two or three months," one corporate bond trader said.

Some participants took a breather following a record $17.6 billion debt sale from General Motors Corp., traders said.

Spreads, the yield gap between corporate bonds and Treasuries, were unchanged to 0.02 percentage point wider overall, traders said. Spreads on the dollar-denominated portion of GM's sale were unchanged after tightening by about 0.10 to 0.15 percentage point on Thursday.

GM's multi-currency offering of corporate bonds and convertible securities was the largest fund-raising ever in the corporate debt markets. GM's paper found no shortage of demand among investors growing desperate for higher yields than Treasuries pay.

The debt sale pushed corporate debt issuance this week to $27.7 billion, the second-busiest week this year behind $28.1 billion sold the week of May 11, according to Dealogic. Those figures include investment-grade, high-yield and convertible debt.

High-yield issuance for the year has now topped $62 billion, more than the $58.9 billion issued all of last year, according to Thomson Financial. Convertible issuance, at $55.2 billion, also has exceeded all of last year, when it was $54.9 billion, according to Morgan Stanley's ConvertBond.com.

"It's not to raise new money necessarily," said John Lonski, chief economist for Moody's Investors Service. "The driving force is refinancing outstanding short-term debt and high-yield bonds for the purpose of improving liquidity."

In the government market, Treasuries were mixed, with benchmark 10-year notes edging 1/32 higher, yielding 3.543 percent, while 30-year bonds fell 9/32, yielding 4.583 percent.