Corporate junk issuers are capitalizing on low interest rates in higher percentages than their investment-grade cousins, according to volume statistics for the first half of 1992.
Refinancings among speculative-grade issuers represented more than two-thirds of the total junk volume for the first six months of the year, compared to just 20% for the investment-grade sector, according to Securities Data Co./Bond Buyer.
Of the $19.3 billion of junk debt issued between January and June, $12.9 billion went to refinance existing debt, according to Joe Miller, an analyst at Newark, N.J.-based Securities Data.
Of the $19.3 billion total represents 110 issues, 69 of which were refinancings.
The 66% market share for refinancings is a jump from 1991 levels, when 53% of the year's issuance went for that purpose. Forty-eight high-yield issues were priced last year for a total of $9.97 billion, Securities Data said. Of those, 29 deals totaling close to $5.3 billion were to refinance existing debt.
On the investment-grade side, issuers offered 873 deals totaling $133 billion in the first half of 1992. About $25.7 billion, in the form of 160 separate offerings, were refinancings.
In all of 1991, high-grade issuers sold 1,569 deals totaling $190.6 billion. Of that, 230 deals totaling $39 billion were for refinancings, mirroring the 20% level sold in the first half of this year.
Securities Data's figures are for nonconvertible debt excluding mortgage and asset-backed issues.
Yesterday's Market
Yesterday's market was quiet and contained no new issues. Uncertainly about which way this morning's big slate of economic indicators would point kept issuers on the sidelines, according to market sources.
Among the releases set for today are the consumers price index and retail sales for June, as well as auto sales for July 1 through 10 period.
Although volume this week is expected to be strong, market sources say it is unlikely to beat last week's nearly $8 billion. A few large deals are expected, however.
A $1 billion Matsushita Electric deal, the first global offering by a corporate borrower, is expected, with Lehman Brothers and the CS First Boston Group acting as joint lead managers.
Grand Union Co. plans an $800 million issue of senior and subordinated notes, which would be the largest single straight bond issue of 1992.
By the end of July, Chrysler Corp. Chairman Lee Iacocca said yesterday the company expects to complete the restructuring of $6.8 billion of Chrysler's finance unit debt.
And even further on the horizon, the chairman of the Federal Home Loan Mortgage Corp. announced yesterday that Freddie Mac would come to market with about $10 billion in new multifamily financings between now and 1997, with a $1.5 billion refinancing program expected by the end of 1993 to kick off the program.
The first phase will be used for the refinancing of multifamily properties and marks the return of Freddie Mac to the multifamily market after a two-year absence, according to the agency.
"We believe this new refinancing program will provide an effective way to stabilize existing affordable multifamily housing while improving loan quality," said Freddie Mac Chairman Leland Brendsel.
In secondary market activity yesterday, traders said high-yields finished the day unchanged in extremely slow trading, while high-grade bonds fell about 1/4 point.
