Big deals by Harris Chemical and Pathmark Stores Inc. could help the new-junk tally land between $1.5 billion and $2 billion this week, one high-yield expert said yesterday.
"Harris, that we think is on the rich side," said Kingman D. Penniman, an executive vice president at Duff & Phelps/MCM Investment Research Co.
Harris Chemical is expected to offer $200 million of senior secured discount notes due 2001 and $335 million of senior subordinated notes due 2003 through lead manager Goldman, Sachs & Co. Price talk on the senior secured discount notes is a yield of 10 1/4%, while talk on the senior subordinated notes in 10 3/4%.
Sifto Canada, a Harris subsidiary, is expected to offer $100 million of seven-year notes, also through lead manager Goldman Sachs.
Fred Cavanaugh, vice president and portfolio manager of John Hancock's $30 million Strategic Income Fund, agreed with Penniman on the 10 3/4% talk for the senior subordinated piece.
"We feel that was a little bit tight," Cavanaugh said.
Expected to join Harris this week is Pathmark Stores Inc. with a two-part offering through Merrill Lynch & Co. Pathmark is expected as early as today to offer $425 million of senior subordinated notes due 2003 and $120 million of junior subordinated deferred coupon notes due 2003.
Price talk on the senior subordinated portion is 9 5/8% to 9 7/8%, while talk on the junior piece is 10 3/4%.
Maxus Energy is expected to price $150 million of senior notes due 2003 through lead manager CS First Boston. Price talk on the offering is 9% to 9 1/4%.
"We like that," Penniman said of the Maxus price talk.
Penniman also likes Pathmark's senior subordinated piece at the upper end of its price talk, and described talk on the junior subordinated piece as "fair."
Also on deck for this week are Agricultural Minerals & Chemicals' $175 million of senior notes through Morgan Stanley & Co.; OMI's $150 million of senior notes due 2003 through lead manager Goldman Sachs; Service Merchandise's $100 million of senior notes due 2003; and Sheffield Steel's $75 million of senior notes due 2001 through Lehman Brothers.
Price talk on Service Merchandise's noncallable offering is in the 8 3/8% area. That deal may also arrive today through lead manager Merrill Lynch & Co.. Penniman thought that a yield around 8 3/8% was "rich."
In other news yesterday, Club Car Inc. extended a cash tender offer for all $83.8 million principal amount of its outstanding 14 1/2% senior notes due 1999. The offer lasts until Oct. 25 at noon, eastern standard time, according to a company release.
The golf cart and utility vehicle manufacturer also extended the deadline for its solicitation of consents regarding a waiver of the notes' indenture. The deadline for both expired at midnight, eastern standard time, on Oct 15. The new deadline for both could also be extended, the release says.
Club Car plans to redeem the notes at $1,090 per $1,000 principal amount plus interest through the payment date. It is also asking note holders to consent to a waiver related to the notes' indenture at a price of $7.50 per $1,000 principal amount..
United States Trust Co. of New York, Club Car's depository, informed the company that, as of 5 p.m. Oct. 15, roughly $61.625 million of aggregate principal amount of the notes had been tendered.
As the company said earlier, note holders may no longer deliver consents without concurrently tendering.
The company's obligation to complete the offer and consent solicitation hinges on certain conditions including completion of an initial public offering of common stock and the company's entering into a new bank agreement.
Donaldson, Lufkin & Jenrette Securities Corp. and CS First Boston are dealer managers.
In secondary trading, spreads on high-grade issues ended firm. New issuance is still relatively light, and "there's still money to be invested," one trader said. High-yield issues ended unchanged.
New Issues
Phillips Petroleum Co. reportedly issued $250 million of 7.20% debentures due 2023 at par. Noncallable for 10 years, the debentures were priced to yield 122 basis points more than the old 30-year Treasury bond. Moody's rates the offering Baa2, while Standard & Poor's rates it BBB. Merrill Lynch & Co. was lead manager of the offering.
CIT Group Holdings reportedly sold $200 million of 5 7/8% debentures due 2008. The noncallable debentures were priced at 99.27 to yield 5.949%, or 75 basis points more than comparable Treasuries. Moody's rates the offering A1, while Standard & Poor's rates it A-plus. Morgan Stanley & Co. managed the offering.
Pennsylvania Power & Light Co. came to market with $150 million of 6 3/4% first mortgage bonds due 2023. Noncallable for 10 years, the bonds were priced at 98.979 to yield 6.83% or 80 basis points over comparable Treasuries. Moody's rates the offering A2, while Standards & Poor's rates it A. CS First Boston was lead manager.
Baltimore Gas & Electric Co. sold $125 million of 5 1/2% first and refunding mortgage bonds due 2004. The noncallable bonds were price at 98.589 to yield 5.68%, or 47.5 basis points more than 10-year Treasuries. Moody's rates the offering A1, while Standard & Poor's Corp rates it A-plus Kidder, Peabody & Co. won competitive bidding to underwrite the offering.
