If investors are still steamed at Marriott, you wouldn't know it from yesterday's $150 million Marriott International Inc. deal.
"It blew out," one trader said.
Marriott Corp. last year angered bondholders with its decision to split into two companies and saddle one, Host Marriott Corp., with virtually all of its debt.
The other company, Marriott International, yesterday issued $150 million of 6.75% senior notes due 2003.
The noncallable notes were priced at 99.281 to yield 6.85% or 105 basis points more than comparable Treasuries. Price talk had been in the 110 area, another market source said.
Moody's Investors Service rates the offering Baa 1, while Standard & Poor's Corp. rates it A-minus. Lehman Brothers was lead manager.
"We're pleased with the reception, and we didn't have any doubts," Nick Hill, a Marriott spokesman, said yesterday.
A second trader, who concurred that the deal was a blowout, commented, "The way it went, you would have to say it was priced to go."
But one buy-side source didn't think the offering was as successful as the other market sources described.
"I think they had to pay extra for it," she said. "I think that unless it had been priced on the cheap side, nobody would have looked at it."
Marriott also probably had wanted to increase the deal from its original size.
For Robert Hickey, an assistant vice president and portfolio manager at Van Kampen Merritt Inc. in Chicago, the decision on whether to participate in yesterday's offering was simple.
"After what happened, we don't believe that we could lend money to them," said Hickey, adding that he avoids staying at Marriott hotels when he's on the road.
In secondary trading, spreads on high-grade issues ended unchanged. High-yield bonds ended 1/8 to 1/4 point higher, with bonds of Stone Container Corp. among gainers.
Now Issues
GTE SouthWest reportedly issued a two-part offering totaling $500 million. The first tranche consisted of $250 million of 5.82% debentures due 1999 at par. The noncallable debentures were priced to yield 50 basis points more than comparable Treasuries.
The second tranche consisted of $250 million of 6.54% debentures due 2005 at par. The noncallable debentures were priced to yield 75 basis points more than comparable Treasuries. PaineWebber was lead manager.
Overseas Shipholding Group Inc. issued a two-part offering totaling $200 million. The first tranche consisted of $100 million of 8% notes due 2003. The noncallable notes were priced at 99.759 to yield 8.035%, or 225 basis points more than comparable Treasuries.
The second consisted of $100 million of 8 3/4% debentures due 2013. The noncallable debentures were price at 99.678 to yield 8.784% or 235 basis points more than 30-year Treasuries. Moody's rates the offering Ba1, while Standard & Poor's rates it BBB-minus. Goldman, Sachs & Co. was lead manager.
Federal Home Loan Banks issued $205 million of 5.38% notes due 1998 at par. Noncallable for a year, the notes were priced to yield 24 basis points more than comparable Treasuries. Salomon Brothers was sole manager of the offering.
Ryland Group issued $100 million of 9.625% senior subordinated notes due 2004. Noncallable for seven years, the notes were rated Ba3 by Moody's and BB-minus by Standard & Poor's. Dillon, Read & Co. was lead manager.
