At least six junk issuers charged the market yesterday, pricing deals totaling $855 million.
Issuing yesterday were: Sequa Corp.; Roadmaster Industries Inc.; Canandaigua Wine; Act III Broadcasting Inc.; Penn Corp. Financial Group Inc.; and Nacolah Group Inc. "I participated in Act III and also the Canandaigua Wine," said Bill Veronda, senior vice president and portfolio manager of INVESCO's High Yield fund. Later in the day, Veronda also took some of Penn Corp.'s offering.
"Act III was very strong with a broad array of accounts represented," Veronda said. The deal traded up to 101-101 1/2 shortly after hitting the after market, he said.
As for Canandaigua Wine, "that appears to have been a relatively good deal too," Veronda said. He added that Sequa Corp.'s two-part $300 million offering also appeared to be in good shape yesterday, though he did not participate. So many deals have come of late, it's hard to focus on them all, Veronda said.
Veronda did not partake of Guangdong Enterprises (Holdings) Ltd.'s $250 million Rule 144A offering, which proved popular enough with investors to be increased from $200 million.
"To me, to buy some of the foreign deals based on a year or two of stability like Argentina - I just can't quite see it," Veronda said, referring to a last week's $1 billion Republic of Argentina deal.
"I feel a lot more comfortable with good solid companies in the U.S. domestic market that make a product here," he said, citing Canandaigua as one such company.
Guangdong Enterprises (Holdings) Ltd. Wednesday priced $250 million of 8.75% senior notes due Dec. 15, 2003. The noncallable notes were priced at 99.676 to yield 8.8%, or 300 basis points more than comparable Treasuries. Moody's Investors Service rates the offering Baa3, while Standard & Poor's Corp. rates it BB. Merrill Lynch & Co. managed the offering.
Another high-yield buyer, Randolph Birkman, portfolio manager of the Pilgrim Group's High Yield Trust, wasn't among buyers yesterday.
"Pretty much I'm done for the year," Birkman said. "We are fully invested at this time."
Birkman emphasized, however, that he still reviews deals but would need a compelling reason to bite because it would mean selling a current holding, and he's happy with the mix he's got.
One deal that inspired him to part with some earlier holdings was last week's $200 million Color Tile Inc. deal, Birkman said. The deal proved attractive enough from an industry and pricing standpoint to make him sell some other bonds, he said.
In secondary trading, high-yield bond prices ended 1/8 point higher. Spreads on high-grade issues were unchanged.
New Issues
Federal Home Loan Banks issued $345 million of 4.73% notes due 1996 at par. Noncallable for a year, the notes were priced to yield 18 basis points more than comparable Treasuries. Goldman, Sachs & Co. was sole manager.
Sequa Corp. reportedly issued a two-part offering totaling $300 million. The first tranche consisted of $125 million of 8.75% senior notes due 2001 at par. Noncallable for four years, the notes were rated B1 by Moody's and BB by Standard & Poor's.
The second tranche consisted of $175 million of 9.375% senior subordinated notes due 2003 at par. Noncallable for five years, the notes were rated B3 by Moody's and B-plus by Standard & Poor's. Bear, Stearns & Co. was lead manager.
Southern California Edison Co. issued $170 million of 5.60% debentures due 1998. The noncallable notes were priced at 99.878 to yield 5.628% or 44 basis points more than comparable Treasuries. A group led by Merrill Lynch & Co. won competitive bidding to underwrite the offering.
Penn Corp. issued $150 million of 9 1/4% notes due 2003 at par. Noncallable for five years, the notes were rated B1 by Moody's and BB-minus by Standard & Poor's. Smith Barney Shearson was lead manager.
Canandaigua Wine reportedly issued $130 million of 8.75% senior subordinated notes due 2003. Noncallable for five years, the notes were priced at par and were rated B1 by Moody's and B-plus by Standard & Poor's. Chase Securities was lead manager.
Act III issued $100 million of 9.625% senior subordinated notes due 2003 at par. Noncallable for five years, the notes are rated B3 by Moody's and B by Standard & Poor's. Donaldson, Lufkin & Jenrette Securities Corp. was lead manager.
Roadmaster Industries Inc. issued $100 million of 11.75% senior subordinated notes due 2023 at par. Noncallable for five years, the notes were rated B3 by Moody's and B-minus by Standard & Poor's. Jefferies & Co. managed the offering.
Nacolah Group issues $75 million of 9.50% senior notes due 2003 at par. Noncallable for five years, the notes were rated BI by Moody's and BB-minus by Standard & Poor's. Donaldson, Lufkin & Jenrette was sole manager.
