Southern New England Telephone Co. and GTE Florida priced new offerings totaling $845 million yesterday.
"They both were good deals," a high-grade trader said, adding that he found pricing on both "very attractive."
Southern New England Telephone issued a two-part medium-term offering totaling $445 million. The first tranche consisted of $200 million of 6.125% notes due 2003. The noncallable notes were priced at 99.16 to yield 6.239% or 45 basis points more than comparable Treasuries.
The second part consisted of $245 million of 7.250% notes due 2033. Noncallable for 10 years, the notes were priced at 99.30 to yield 7.304% or 85 basis points more than comparable Treasuries. Moody's Investors Service rates the offering Aa2, while Standard & Poor's Corp. rates it AA. Lehman Brothers was lead manager.
Jim Magrone, the company's director of investor relations, said Southern New England Telephone will use proceeds to refinance existing debt. The company yesterday called its $200 million of 8 5/8 0/0 debt due 2006, Magrone said. Southern New England will make announcements about other issues in the next few days, he said.
"There are other issues out there that are noncallable that we are about to tender for," Magrone said.
For its part, GTE Florida issued a two-part offering totaling $400 million. The first tranche consisted of $200 million of 6.31% debentures due 2002 at par. The noncallable debentures were priced to yield 52 basis points more than comparable Treasuries. The second tranche consisted of $200 million of 7.41% debentures due 2023 at par.
The noncallable debentures were priced to yield 95 basis points more than comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A-plus. Merrill Lynch & Co. was lead manager.
In secondary trading, spreads on high-grade issues ended unchanged.
"We followed the Treasury guys down. Spreads really are the same," a high-grade trader said. Junk bond prices ended firm in quiet trading as new deals continued to hold participants' interest.
New Issues
Federal Home Loan Banks reportedly issued $350 million of 6.41% debentures due 2003 at par. Noncallable for two years, the debentures were priced to yield 66 basis points more than comparable Treasuries. Morgan Stanley & Co. was lead manager.
Federal Home Loan Banks came to market with $100 million of 4.61% notes priced initially at par. Noncallable for a year, the notes were priced to yield 10 basis points more than comparable Treasuries. Goldman, Sachs & Co. was sole manager.
Federal Home Loan Banks issued $100 million of 5.40% bonds due 1998 at par. Noncallable for a year, the bonds were priced to yield 26 basis points more than comparable Treauries. Lehman Brothers was sole manager.
Rating News
Moody's cut the ratings on Paramount Communications Inc.'s senior notes and debentures to A3 from A2, subordinated debentures to Baal from A3, and short-term debt rating for commercial paper to Prime-2 from Prime-1.
The rating agency is also continuing to review all of the company's debt for a possible further downgrade. Approximately $1 billion of debt is affected, according to a Moody's release.
The review began on Sept. 12, after the announcement of Paramount's proposed merger with Viacom Inc., the Moody's release says.
"The downgrade is based on the fact that a business combination with either Viacom Inc. or QVC Networks Inc. demonstrates Paramount's willingness to incur substantially higher financial risks, which are reflected more accurately in the company's new ratings," the release says.
"Therefore, even if Paramount were not acquired, which appears to be a very unlikely occurrence, the company's ratings would most likely remain at A3/Prime-2."
