Several high-grade issuers rushed the corporate market yesterday after a quite Monday, with Ford Motor Co. driving in For $700 million.
"Today, all of a sudden, people are just jumping in with both feet to get some business done," one trader said.
Ford's $700 million deal consisted of two $350 million tranches. The first contained 9% noncallable notes due 2001 and priced at par to yield 128 basis points over 10-year Treasuries. The second piece consisted of 9.5% noncallable debentures due 2011 and priced at 99.918 to yield 9.509%, or 150 basis points over 30-year Treasuries.
The 10-year portion was managed by Goldman, Sachs & Co.; Bear, Stearns & Co.; Lehman Brothers; and Merrill Lynch & Co. On the 20-year piece, Goldman, First Boston Corp., J.P. Morgan Securities Inc., and Salomon Brothers served as managers.
Moody's Investors Service rates the securities A2, while Standard & Poor's Corp. gives them an A.
Other key issuers yesterday included General Electric Co., which issued $500 million of 7.875% noncallable notes due 1998. The notes were priced at 99.895% to yield 7.895% or 36 basis points over seven-year Treasuries. Both Moody's and Standard & Poor's assigned the notes a triple A. Kidder, Peabody & Co. managed the offering.
Boeing Co. issued $250 million of 8.75% debentures due 2031. The noncallable debentures were priced at 99.328% to yield 8.811%, or 80 basis points over comparable Treasuries. Moody's rated the deal Aa3, while Standard & Poor's assigned a AA. First Boston Corp. served as lead manager.
Ohio Edison Co. issued $150 million of 8.625% first mortgage bonds maturing in 2003. The noncallable bonds were priced at 99.815 to yield 8.65%, or 93 basis points over comparable Treasuries. Moody's rated the deal Baa2, while Standard & Poor's Corp. assigned a BBB. Morgan Stanley & Co. managed the offering.
"Interest rates are low right now. They are below 8%, and it's just an advantageous time to go to market," Delores Jones, a company spokeswoman, said.
Proceeds from the deal will be used to fund the company's ongoing systems improvement program and for general corporate purposes, Ms. Jones said.
Also yesterday, USX Corp. yesterday issued $150 million of 8.875% noncallable notes priced at par to yield 150.5 basis points over the interpolated six-year Treasuries.
The notes mature in 1997. Lehman Brothers and Morgan Stanley co-managed the offering, which is rated Baa3 by Moody's and BBB-minus by Standard & Poor's.
"The bond market has been good the past couple of days," said Bill Keslar, a spokesman for USX, in explaining why the Pittsburgh-based oil, gas, and steel company chose to issue now.
Proceeds from the issue will be used to repay debt and for general corporate purposes, he said.
Household International Inc. issued $100 million of 7% noted due 1993. The noncallable notes were priced at 99.774 to yield 7.12%, or 90 basis points over comparable Treasuries. Moody's rates the offering Baa1, while Standard & Poor's gives it an A. Lehman managed the deal.
Michael Morgan, a spokesman for the consumer credit company, said it would use proceeds for general corporate purposes. Timing of the issue was "market related," he said.
Also tapping the market was Otter Tail Power, which issued $20 million of 8.750% first mortgage bonds. Noncallable for 10 years, the bonds mature in 2021 and were priced at 98.69 to yield 8.875% or 87 basis points over comparable Treasuries. Moody's rates the issue Aa3, while Standard & Poor's rates it AA-minus. Piper, Jaffray & Hopwood Inc. managed the offering.
In other news, mcDonald's Corp. has filed a shelf registration with the Securities and Exchange Commission for up to $300 million of new debt securities, the company announced yesterday.
McDonald's, the world's largest food service company, plans to issue the securities, primarily medium-term notes, periodically on terms specified at the time of each issuance. At the company's discretion, the securities can be denominated in U.S. dollars or other currencies including European Currency Units, and may be offered in the United States and European markets.
Proceeds will be used for debt re-financings, capital expenditures and other general corporate purposes.
Combined with the remaining unused portion of a shelf registration filed in May 1990, the company will have approximately $402 million available for issuance of medium-term notes.
Agents for the program are Merrill Lynch, J.P. Morgan, Morgan Stanley, PaineWebber, and Salomon.
Overall, high-grade bonds were unchanged in secondary trading. In the high-yield market, Carter Hawley Hale Store bonds were "very well bid," but, over all, the market was unchanged to a 1/4 to 1/2 point weaker, one trader said.
As for ratings, Duff & Phelps Inc. has rated Barnett Banks Inc.'s $100 million convertible preferred shares were priced at $50 each with a $4 dividend to yield 8%.
