Claire's Stores Inc., the jewelry retailer owned by ApolloGlobal Management LLC, and Chesapeake Energy Corp. are offeringbonds, as investor appetite for high-yield debt soars to thehighest level since June.

Claire's, graded Caa2 by Moody's Investors Service and B- byStandard & Poor's, sold $400 million of 9 percent, seven-yearnotes, according to data compiled by Bloomberg. Chesapeake, ratedthree steps below investment grade at Moody's, may issue $1 billionof seven-year debt at a yield of about 7 percent today, said aperson with knowledge of the offering, who declined to beidentified because terms aren't set.

Borrowing costs for high-yield, high-risk companies have tumbledto the lowest since August on signs the economic recovery isgaining traction and as the Federal Reserve pledges to holdinterest rates at record lows through at least late 2014. Investorshave poured more than $1.35 billion into junk mutual funds for fiveweeks, JPMorgan Chase & Co. analysts wrote in a Feb. 10 note,helping the companies sell $44.3 billion of debt this year, thebusiest two months since May and June.

“The high-yield makeup is better quality than we've ever seenit,” Margie Patel, a fund manager at Wells Fargo & Co., said ina Bloomberg Television interview on “Surveillance Midday” with TomKeene. Junk borrowers are being “very prudent about their balancesheets and very opportunistic,” she said.

Yields on debt rated CCC and lower reached 12.65 percent on Feb.8, the lowest since Aug. 17, according to Bank of America MerrillLynch index data. Endeavour International Corp., a Houston-basedoil and gas exploration company, sold $500 million of 12 percent,seven-year notes today rated Caa1 by Moody's, Bloomberg datashow.

Claire's is seeking to replace a revolving line of credit by2013 and refinance $1.2 billion of term loans due in 2014, GimmeCredit LLC analyst Evan Mann wrote in a Feb. 10 note.

The notes from Claire's will be graded B3 by Moody's, accordingto a note today.

Despite the fashion-stores company's slide in credit quality,from an overall rating of B3 assigned in 2007, the 9 percent yieldrepresents the second-lowest coupon on record for Claire's after8.875 percent debt issued in July, according to data compiled byBloomberg.

High-Yield Rally

“People are more comfortable with CCCs now than a month agobecause of the rally in the market,” said Marc Gross, a moneymanager at RS Investments in New York who oversees $3 billion offixed-income funds. That's helping a company like Hoffman Estates,Illinois-based Claire's sell debt, he said.

Companies graded CCC have accounted for 7.2 percent of bondsales this year, compared with 10.4 percent in 2011, according tothe Feb. 10 note from JPMorgan.

Chesapeake, based in Oklahoma City, is marketing debt as itplans to raise as much as $12 billion this year from asset salesand joint ventures in an effort to generate enough cash to meetdrilling expenses. Proceeds from the bond sale, the natural-gasextractor's second in a five-month period, will be used to pay backbank borrowings and for general corporate purposes, the companysaid today in a statement.

Yields on all speculative-grade bonds tumbled to 7.76 percent onFeb. 9, the lowest since Aug. 3, before rising to 7.78 percent onFeb. 10, Bank of America Merrill Lynch index data show. Relativeyields fell to 626 basis points on Feb. 9, the lowest since Aug. 5,the index data show.

High-yield, high-risk, or junk, debt is rated below Baa3 byMoody's and lower than BBB- at S&P.

CityCenter Holdings LLC, the joint venture of MGM ResortsInternational and Dubai World, priced a $240 million add-on to anissue of 7.625 percent first-lien senior secured notes at 104.75cents on the dollar, the company said in a statement distributed byPR Newswire.

Bloomberg News

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