High-grade issuers fed the new-issue <
market $850 million of paper yesterday following Tuesday's largely arid session.
Old Dominion Electric Cooperatives's <
$550 million offering provided most of the muscle yesterday to help push new corporate issuance to an unofficial $20 billion for the month, according to combined figures from IDD Information Services and syndicate desks.
IDD tallied $19.1 billion of new <
debt through last Friday, a spokeswoman there said.
Marketing its first offering of debt <
registered with the Securities and Exchange Commission, the cooperative issued its $550 million of first mortage bonds in three tranches.
Old Dominion, a generation and <
transmission cooperative, previously relied on the Rural Electrification Administration, a federal agency, for its financing needs, according to Melanie McElhinney, a spokeswoman for the cooperative.
Old Dominion decided to exit the <
program because it wanted to maintain its 50% ownership interest in the Clover Project, Ms. McElhinney said.
The cooperative's foray into the <
public market marks the "first time a power supply cooperative owning generation facilities has 'graduated' from the #REA's] loan guarantee program without special federal legislation," according to an Old Dominion release.
The project is a twin-unit power <
plant that the cooperative is building with partner Virginia Electric, according to the release.
Last September, REA issued a <
$663 million loan guarantee commitment for Old Dominion's half of the Clover project.
But Old Dominion later learned <
that some conditions of that loan guarantee entailed actions state regulatory agencies could not approve under existing laws. In March, Old Dominion's board decided to seek alternatives to REA financing, the release said.
According to Daniel Walker, a <
vice president of accounting and finance at Old Dominion, the move marks a complete overhaul of the cooperative's debt.
"We are replacing all our existing <
debt and putting in place new debt," he said.
Old Dominion will use some proceeds <
to pay off its REA-guaranteed Federal Financing Bank loans, an interim loan from National Rural Utility Finance Corporation, and interim financing provided by Old Dominion members.
The utility will dedicate about <
$150 million to its continuing capital needs, mostly for the Clover Project.
The $550 million offering's first <
tranche consisted of $50 million of 7.27% bonds due 1997 at par. The noncallable bonds were priced to yield 50 basis points over five-year Treasuries.
Tranche two consisted of $150 <
million of 7.970% bonds due 2002 at par. The noncallable bonds were priced to yield 70 basis points over seven to 10-year Treasuries.
The third consisted of $350 million <
of 8.760% bonds due 2022 at par. Noncallable for 10 years, the bonds were priced to yield 85 basis points over 30-year Treasuries. All three tranches have sinking funds.
Smith Barney, Harris Upham & <
Co. sole managed the offering with Scott & Stringfellow Investment Corp. and Wheat First Butcher & Singer Capital Markets as syndicate members.
In other news, EZ Communications <
Inc. yesterday announced a tender offer for at least 90% of its publicly held 12.70% senior subordinated notes due 1996.
The company is offering $950 for <
each $1,000 principal amount of the notes, EZ Communications said in a release.
The offer expires June 24, unless <
the company extends it. Of the $50 million of notes the company issued in November 1986, $42 million remain outstanding. EZ Communications owns and operates radio stations.
In secondary trading, high-grade <
bond prices followed Treasuries, which moved up about 1/4 point in the long end and slightly less in the 10-year sector. High-yield bonds finished flat in light activity.
West Deutsche Landesbank issued <
$100 million of 4.375% medium-term notes priced initially at par. The noncallable notes were priced to yield 15 basis points over the one-year Treasury bills on a bond equivalent basis. Moody's Investors Service rates the offering Aal, while Standard & Poor's Corp. rates it AA-plus. Morgan Stanley sole managed the offering.
Bayerische Landesbank issued <
$100 million of variable-rate certificates of deposit due 1993. The noncallable 4.375% certificates were priced initially at par to yield 15 basis points over one-year Treasury bills on a bond equivalent basis. Both Moody's and Standard & Poor's assigned triple-A ratings. Goldman, Sachs & Co. sole managed the offering.
Rabobank Nederland issued <
$100 million of variable-rate depositary notes due 1993. The noncallable 4.30% notes were priced initially at par to yield nine basis points over one-year Treasury bills. Both Moody's and Standard & Poor's rate the notes triple-A. Goldman Sachs sole managed the offering.
Standard & Poor's has given a B-plus <
rating to J. Baker Inc.'s $65 million convertible subordinated debentures due 2002. The implied senior rating is BB.
"The rating reflects the company's <
relatively high business risk, partially mitigated by adequate measures of profitability and cash flow protection and a moderate capital structure," a Standard & Poor's release said.
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