By Nancy Leinfuss
NEW YORK, May 27 (Reuters) - U.S. corporate bonds lingered in unchanged territory in post-holiday trade on Tuesday, as some market players extended their Memorial holiday while others paused to reassess their strategies amid a prolonged market rally, traders said.
"We've had this tremendous rally; however, we really haven't seen the turn in fundamentals that warrants most of the rally and so we feel the market is exposed in that regard, and is poised to weaken somewhat," said Gregory Peters, corporate bond strategist at Morgan Stanley.
Corporate bonds have struggled to keep pace with rallying Treasuries since Federal Reserve chief Alan Greenspan warned earlier this month about the risks of deflation, driving investors into safe-haven government debt.
"We're actually starting to see less risking-taking, which was a function of this phenomenal rally, and investors are more in a four corners mode," said Peters. "They have already made a lot of money this year and they don't need to really pull a rabbit out of the hat, so to speak. They're just protecting profits," he said.
Meanwhile, industrial gas firm Praxair was the sole issuer on Tuesday, selling $350 million of 10-year notes at a yield spread of 0.6 percentage point over Treasuries.
About $1.9 billion of junk bond sales sit on the corporate calendar for this week's business. Of those issuers, Huntsman LLC postponed its $250 million senior note sale, market participants said on Tuesday.
Last week, Moody's assigned Huntsman's proposed offering a "B3" rating. It also raised the firm's guaranteed senior secured priority revolving credit facility rating and those of its $938 million guaranteed secured term loans A and B.
Proceeds from Huntsman's upcoming sale were expected to be used to refinance a portion of the firm's term loan B, according to Moody's, which said Huntsman would face step-ups in interest rates and principal if $350 million of the firm's term loan B was not paid before May 31, 2003.
To see recent or upcoming bond sales, click on [nNEUBD4].