An "unsettled bond market" led GTE North Inc. to postpone the $251 million competitive bid offering it had scheduled for yesterday, a company spokesman said.
"As soon as that settles down, we'll, go ahead and rebid it," said GTE spokesman Jeff Jones. The offering was expected to consist of six-year debentures, he said.
The 30-year Treasury bond fell nearly a point early yesterday, pummeled by a better than expected September new home sales figure from the Commerce Department. September new home sales posted the biggest single month increase since December 1986, jumping 20.8% from August. The bond rebounded later in the day to end 1/2 point lower. That loss follows a drop of nearly a point on Monday.
"Everyone's nervous," said Joe Mullally, a vice president and senior fixed-income strategist at CS First Boston.
That nervousness has been increasing lately as pieces of economic news such as yesterday's home sales figure and Monday's National Association of Purchasing Management's index come in showing more signs of economic life than the market had anticipated.
"Rates are jumping back and forth," Mullally said, noting that issuers would rather wait to price a deal until they have a better indication of which way interest rates are going.
"They are waiting for the market to settle," he said.
Mullally cautioned, however, "If rates back up a little bit more from here you might see some panic issuance." Issuers will assume the rally has bottomed out, he said.
But Mullally thinks issuance will remain fairly light this week ahead of Friday's September employment figure.
"That is going to be the big piece of information," he said.
The high-grade secondary market saw little excitement yesterday.
"It was very, very quiet today, as it was yesterday." one trader said. Spreads seemed to tighten a bit yesterday after widening slightly on Monday', he said. The trader cited volatility in the triple-B industrial sector, notably Westinghouse debt.
Another trader said Westinghouse had widened about 35 basis points in the past few days on the possibility of a Moody's Investors Service downgrade. The debt then tightened by about 10 basis points as buyers came in, leaving it roughly 25 basis points wider yesterday than when concerns first surfaced.
Some triple-B utilities also widened, the first trader said, particularly Long Island Lighting Co., which widened 30 to 50 basis points in the past week or so. The widening followed Standard & Poor's Corp.'s Oct. 27 review of investor-owned utilities that revealed "more stringent financial risk standards are appropriate to counter mounting business risk."
High-yield bonds ended a quiet day unchanged.
Elsewhere yesterday, Chase Securities Inc. said it has formed a mortgage-backed securities division and has named former Daiwa Securities managing director Barry Berkeley to head it, according to a release issued on the company's behalf.
Berkeley, 36, will hold the title of managing director and be responsible for all origination, sales, trading, and quantitative structuring for mortgage-backed securities. He will report to Robert S. Cohen, division executive of fixed-income securities. Berkeley had worked in Daiwa Securities' mortgage-backed group since 1990. Previously, he served as managing director and national sales manager of mortgage-backed securities for PaineWebber Inc.; national sales and product manager for Prudential Securities Inc.; and a limited partner in Bear, Stearns & Co.'s financial services department. In other news yesterday, Advanta Corp. filed a registration statement with the Securities and Exchange Commission to offer $1 billion of debt. No underwriters have been named and the company has no specific plans for an issue, according to Janet Point, a vice president in Advanta's investor relations department.
Dean Witter Discover issued $250 million of 6.50% notes due 2005 at par. The noncallable notes were priced to yield 87 basis points more than comparable Treasuries. Moody's rates the offering A3, Standard & Poor's rates it A, and Fitch Investors Service Inc. rates it A-plus. Dean Witter Reynolds Inc. was lead manager.
International Paper issued $200 million of 6.125% notes due 2003. The noncallable notes were priced at 99.519 to yield 6.19%, or 58 basis points more than comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it Aminus. CS First Boston was lead manager.
Mississippi Power & Light Co. issued $65 million of 6.625% guaranteed and refunding mortgage bonds due 2003. Noncallable for five years, the bonds were priced to yield 98 basis points more than comparable Treasuries. Moody's rates the offering Baa3, while Standard & Poor's rates it BBB. Kidder, Peabody & Co. was lead manager.
Elizabethtown Water Co. issued $50 million of 7.25% debentures due 2028. Noncallable for five years, the bonds were priced at 98.75 to yield 7.35%, or 100 basis points above the old 30-year Treasury bond. A group led by Salomon Brothers Inc. won competitive bidding to underwrite the offering.
Washington Gas Light Co. issued $36 million of 6.95% medium-term debentures due 2023. Noncallable for 10 years, the bonds were priced at 98.529 to yield 70 basis points above the old 30-year Treasury bond. Moody's rates the offering A1, while Standard & Poor's rates it AA-minus. Kidder Peabody managed the offering.
