Speculative-grade companies are selling more than $1 billion of junk bonds Thursday as they seize the opportunity to raise cash to repay debt and fund their operations.

The biggest deal is from wireless infrastructure provider Crown Castle International Corp. (CCI), which is in the market with $900 million in notes. This is larger than the initial target of $600 million, according to one person familiar with the situation. Petrohawk Energy Corp. (HK) also plans to sell $500 million-$600 million in bonds - more than the originally planned $300 million - and gas transmission and distribution company Tennessee Gas is looking for $250 million in what are known as drive-by offerings.

A drive-by offering means there is enough demand for a deal without borrowers having to do a long investor roadshow. Drive-bys used to be fairly common in the junk bond market, but they have been few and far between since the credit crisis began. The drive-bys are yet further indication of a reopening of the new-issuance market for lower-rated companies and follow Nielsen Co. BV's $330 million junk-bond sale Wednesday.

"As time goes by, the pace of issuance is picking up and more and more deals are getting done," said Martin Fridson, chief executive of investment firm Fridson Advisors in New York.

This is excellent news for companies that need to raise cash and have been locked out of the market for months. Investors caution, however, not to get too excited, saying that well-known companies with strong credit profiles will continue to find it easier to sell debt but lesser-known firms that are vulnerable to the weak economy will still face difficulties.

"[Crown Castle, Petrohawk and Tennessee Gas] are well-known, good-quality companies that would normally have access to the market," said Kenneth Monaghan, head of high-yield credit and portfolio manager at Rogge Global Partners in New York.

Investors have turned their attention back to corporate bonds over the last few weeks, as yields on risk-free assets, such as Treasurys, are so low that buyers get very little return.

"High yield is catching part of this, where people are looking for limited downside with very high yields," said Gary Sullivan, head of high-yield bond portfolio management at DB Advisors, the institutional asset management arm of Deutsche Bank, on a call with journalists last week.

This renewed interest has allowed speculative grade borrowers to sell $1.428 billion of bonds already in January, making it the busiest month for high-yield issuance since July 2008 when companies raised over $3.8 billion in the market, according to data provider Dealogic.

"It doesn't say that the market has turned around, but to see three companies coming to market simultaneously after months of very little issuance is striking," Fridson said.

A revival of the junk bond market, which is a vital source of financing for some of the world's major companies, is becoming more and more important as the default rate increases and the number of borrowers being downgraded to sub-investment grade rises. Speculative-grade borrowers made up the majority of U.S. corporate debtors for the first time in 2007, according to Standard & Poor's.

Crown Castle is expected to price its bonds to yield 11.25%-11.5%, according to a person familiar with the deal. The bonds are expected to come at a discount to par value to give a coupon of 9%. The yield on Petrohawk's 5 1/2-year bonds is expected to be 12.75%-13% and the coupon is seen in the mid-10% area. Tennessee Gas, a unit of El Paso Corp. (EP), is expected to sell its seven-year senior notes at a discount of around 95 cents on the dollar to yield 9%-9.25% for a coupon of 8%-8.25%.

The yields are less than what the companies could have ended up paying had they tapped the market last year. But the cost of borrowing is still at record highs.

U.S. junk bonds have returned 4.71% year-to-date after having fallen over 30% since the start of last year, Merrill Lynch Master II High Yield Index. Risk premiums, or spreads over risk-free Treasurys for high-yield bonds, meanwhile stood at 16.71 percentage points Wednesday, according to Merrill. That's nearly twice what they were at the start of 2008 but well below the peak of 21.82 percentage points in mid-December.

Average yields are around 18%. This is down from highs of more than 20% last year, but it's still more than double the yields junk bond issuers have traditionally been used to.

Successful deals from Crown Castle, Petrohawk and Tennessee Gas won't necessarily mean that fallen angels - companies that have had their credit ratings cut to junk from investment-grade - will find it easy to raise financing in the bond market, Rogge's Monaghan said.

"There is money coming into the market and people are looking to buy new deals. But it doesn't mean that it's going to be a walk in the park for every company that wants to tap the market," Monaghan said.

All three deals are expected to price later Thursday, according to people familiar with the situation.

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

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