US CORP BONDS-Spreads firm, JPMorgan, Hovnanian tap mkt

NEW YORK, May 16 (Reuters) - U.S. corporate bonds firmed on
Friday, encouraged by resilient stocks, while companies
including investment bank JPMorgan Chase (JPM.N: Quote, Profile, Research) and
homebuilder Hovnanian Enterprises Inc (HOV.N: Quote, Profile, Research) raised new cash.

U.S. stocks cut losses on Friday and the S&P 500 briefly
turned higher, boosted by gains in the energy sector as oil
prices rose.

"Spreads remain firm even with the Dow down just a little
bit. It just seems like there is a lot of cash coming into this
market," a trader in New York said.

While cash bonds firmed, the benchmark investment grade
credit derivative index widened about 1 basis point to 91 basis
points from its lowest level since the new series of the index
was launched in late March.

Credit spreads have been tightening since late March as
investors pared expectations of systemic financial risk after
the Federal Reserve opened its discount window to brokers and
orchestrated the rescue of Bear Stearns.

Tighter spreads and still low interest rates have prompted
many companies to tap the new issue market to refinance or prop
up their ailing balance sheets.

On Friday, JPMorgan sold $2.5 billion of 30-year bonds with
a 6.4 percent coupon yielding 195 basis points over U.S.
Treasuries, according to International Financing Review.

JPMorgan 7.9 percent bonds due in 2018 traded at 381 basis
points over Treasuries, according to MarketAxess.

High-grade companies have issued $85.9 billion of debt
month-to-date, according to Thomson Reuters data.

And high-yield sector was also active as home builder
Hovnanian announced a private placement offering of $600
million of new five-year senior secured notes, according to KDP
Advisor.

The new debt sale is part of the home builder's effort to
shore up its liquidity in the face of a weak and uncertain
housing market and alleviate any potential bank covenant
issues, KDP said.

Hovnanian 7.5 percent notes due in 2016 traded at 73 cents
on the dollar on Friday, up slightly from 72.25 cents on
Thursday, according to MarketAxess.
(Reporting by Anastasija Johnson)