Investor demand for new corporate bond issuance is upbeat but the week's calendar has dried up after a robust three days saw $22.7 billion of investment-grade issuance.

"The market is a little exhausted," a syndicate manager in New York said. "We're just letting some earlier deals digest."

Only a $400 million issue of five-year notes from The Kroger Co. (KR) has been shopping for buyers as of late-morning, and issuance is expected to remain slow Friday as the market eases into the Martin Luther King Jr. long weekend. Early pricing guidance has the Kroger bonds being marketed at 140 basis points over the Treasury rate.

"The week was expected with a $20 billion type of number, and we are well over that," said Brian Cogliandro, head of syndicate at Mitsubishi UFJ Securities. "It has nothing to do with the tone or investor appetite, it's just that certain people had the ability to move deals a couple of days up, but others with a later calendar didn't have that ability."

Investors who purchase in the primary market continue to be rewarded as new issues have improved substantially this week.

Five-year bonds from Rabobank Nederland were recently trading at a spread to Treasurys of 2.34 percentage points, versus the 2.58 point spread they were priced at Wednesday in a $2.5 billion offering, MarketAxess shows.

Energy Transfer Partners' (ETP) 10- and 30-year bonds, issued Tuesday, have improved 13 basis points and 21 basis points since pricing. Their respective spreads to Treasurys are now 3.12 percentage points and 3.29 points.

Broader secondary market activity indicates the market is still in a bullish mode, although Markit's CDX North America Investment-Grade Index, a benchmark measure, is up 0.7% now versus a 1.1% improvement earlier in the session.

Markit's CDX North America High-Yield index is flat, whereas it was up 0.3% earlier.

Eight of the top 10 most actively traded bonds Thursday have improved versus Treasurys, according to MarketAxess, which has reported more than $5 billion of trading volume as of 11:30 p.m. EST.

-By Patrick McGee, Dow Jones Newswires; 212-416-2382; patrick.mcgee@dowjones.com

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