Mydentist Said to Market Pound Junk Debt in Brexit Demand Test

Mydentist is marketing the biggest sale of speculative-grade bonds in pounds this year in a sign investor appetite for riskier assets is recovering after last month’s Brexit vote.

The U.K. operator of more than 650 dental practices is offering 425 million pounds ($560 million) of six-year fixed-rate notes and floating-rate notes to repay existing debt, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. Officials at Manchester-based Mydentist couldn’t be reached for comment on the sale.

Only four companies have issued sterling-denominated junk bonds this year and none have been sold since May 20 as uncertainty surrounding Britain’s referendum deterred borrowers and investors from the market. That’s despite borrowing costs for the debt falling to the lowest in a month as European Central Bank stimulus prompts investors to take on more risk and venture into other markets in search of higher returns.

Sterling-denominated bonds have recovered most of their losses since the June 23 vote, sending the average yield on the bonds down to 6.75 percent, according to Bank of America Merrill Lynch index.

The biggest deal until now had been a 360 million-pound issue by budget accommodation chain Travelodge Hotels Ltd. in April.

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