About 10 high-yield deals totaling $1.45 billion are expected to arrive this week.
It's just overwhelming," Fred Cavanaugh, vice president and portfolio manager of John Hancock's Strategic Income Fund, said yesterday.
"It's straining our resources as far as our staff is concerned, and I'm sure we're not alone," Cavanaugh said, noting that last week was also busy. According to Securities Data Co., nine junk offerings were priced last week, totaling $1.536 billion.
Among this week's offerings, Cavanaugh cited an issue of $130 million of 10-year senior subordinated notes by Canandaigua Wine Co. through lead manager Chase Securities.
"I like that credit a lot," Cavanaugh said. "It's a neat little company.
But whether John Hancock's buys any of the offering will come down to pricing, he said.
Price talk on the offering is 8 7/8% to 9%, a source familiar with the offering said, adding the it is expected to arrive on Thursday.
Donaldson, Lufkin & Jenrette Securities Corp. is expected to underwrite three deals this week. Act III Broadcasting is expected to offer $100 million of senior subordinated notes due 2003 on Tuesday night. Price talk of the offering is 9 5/8% to 9 7/8%. Donaldson is lead manager.
Nacolah Group Inc. is expected to offer $75 million of senior notes due 2003 with Donaldson Lufkin as sole manager, also on Tuesday night. Price talk on the offering is 9 1/4% to 9 1/2%.
Tomorrow night, Santa Fe Hotel is expected to offer $100 million of first mortgage bonds due 2000, also through Donaldson Lufkin as lead manager. Price talk is 11/2%.
Today, Guangdong Enterprises Holdings) Ltd. is expected to price a global offering of $200 million of 10-year senior notes. Moody's Investors Service rates the offering Baa3, while Standard & Poor's Corp. rates it BB. Merrill Lynch & Co. will be sole manager.
Tomorrow or Thursday, Roadmaster Industries Inc. is expected to sell $100 million of senior subordinated notes due 2002 through sole manager Jefferies & Co.
Smith Barney Shearson is set to serve as lead manager on two offerings expected later this week, possibly Thursday. Penncorp Financial Group Inc. is expected to offer $150 million of senior subordinated notes due 2003, while Trism Inc. is slated to offer $100 million of senior subordinated notes. Price talk was unavailable for either issue.
Also expected this week is Sequa Corp.'s two-part offering totaling $300 million through lead manager Bear, Stearns & Co. The first tranche consists of $125 million of senior notes due 2001, while the second consists of $175 million of senior subordinated notes due 2003. The senior piece will be noncallable for four years, while the senior subordinated notes will be noncallable for five years. Price talk was unavailable yesterday.
And, last but not least, Republic Engineered Steels Inc. is expected to sell $200 million of first mortgage notes due 2001 some time this week through lead manager Citicorp Securities Inc. The offering was increased from $175 million. Price talk is 9 7/8% to 10.
In secondary trading, high-yield bond prices ended unchanged overall, while some Trump issues ended higher. Spreads on high-grade issues were unchanged to slightly tighter as prices trended lower with Treasuries.
New Issues
Federal Home Loan Banks issued $400 million of 3.33% notes due 1994 at par. Lehman Brothers Inc. managed the offering.
Federal National Mortgage Association issue $200 million of 6.32% medium-term notes due 2003 at par. Noncallable for three years, the notes were priced to yield 55 basis points more than comparable Treasuries. Goldman, Sachs & Co. was sole manager.
South Carolina Electric & Gas issued $100 of 6.25% first mortgage bonds due 2003 at par. The noncallable bonds were priced to yield 50 basis points more than comparable Treasuries. Moody's rates the offering A1, while Standard & Poor's rates it A. Painewebber Inc. was lead manager.
Rating News
Standard & Poor's has given a BB long-term rating to Guangdong Enterprises Holdings) Ltd.'s proposed $200 million of senior notes due 2003.
"The rating reflects the high risks of the company's operations and finances, which are partially offset by GDE's close relationship with and financial support from the People's Government of Guangdong Province, which wholly owns the company indirectly," Standard & Poor's said in its release.
