Canada’s largest theater chain has attracted orders for more than three times the amount of bonds it was offering on Thursday, to clinch the first Canadian junk bond sale of the year.

Cineplex Inc. sold $575 million (US$426.9 million) of high-yield notes maturing in 2029 to yield 7.625 per cent, according to people familiar with the matter. That’s at the tight end of a guidance range that had already been revised down twice from initial price talk, said the people, who asked not to be identified as the details are private. 

A representative for Cineplex didn’t immediately reply to a request for comment.

The deal drew as many as 61 buyers — more than twice the typical number of participants for a high-yield offering, the people said. The strong demand for the securities comes amid an issuance dry spell so far this year in Canada’s junk bond market. That meant Cineplex was also able to upsize its deal from an initial target of $550 million. 

An unusual feature of Cineplex’s bond sale is that it took place over the span of two days. Issuers usually keep order books open for just a few hours to lower their exposure to external forces that may force them to compromise during the sale process.

Cineplex’s Thursday offering is part of a wider reorganization of the theater chain’s borrowings. The company is making an effort to strengthen its finances after it took a hit during the Covid-19 pandemic. 

Earlier this week, S&P Global Ratings assigned Cineplex a B+ rating, placing it four rungs below investment-grade.

“Despite a slowdown in the Canadian economy, the recent momentum in the cinema industry supports our expectation for an improving operating performance in 2024 and 2025,” S&P analyst Monysh Bandeally wrote in a Feb. 14 note.

The company’s S&P ratings-adjusted ratio of debt to earnings before interest, taxes, depreciation and amortization will be close to 4.5 times in fiscal year 2024, and improve to around 4 times in 2025, S&P estimates.