Bank issues have been among the high-yield market's best performers in the past six weeks, sources said.
"The feeling is that banks have turned a corner and the worst is behind them," Kingman Penniman, an executive vice president at Duff & Phelps/MCM Investment Research Co., said.
In addition, banks' equity issues have received warm welcomes, enabling banks to take out debt and strengthen balance sheets, Mr. Penniman continued.
Among issues gathering steam is Midlantic Corp.'s 9 1/4 % debentures due 1999, he said. They traded at 72 on May 1, moved to 75 by May 8, and have reached the 90s, Mr. Penniman said yesterday.
One portfolio manager yesterday morning cited Hartford National Corp,'s 9.85% notes due 1999 as another gainer. Those bonds rose to about 103 from 90 during the past month or so as the credit appears poised to jump from junk to investment grade, he said.
According to Fred W.Debussey, a senior vice president at Fitch Investors Service, Hartford was one of the two holding companies melded to form Shawnut then assumed responsibility for that Hartford debt, he said.
On May 7, Fitch affirmed Shawmut's $430 million of BB-plus senior debt and revised the company's credit trend to improving from declining. The rating agency noted, however, that "while the new credit trend is indicative of the progress being made by Shawmut, an upgrade of the rating is not in the offing at this time."
Difficult Japanese equity market conditions led Matsushita Electric Industrial Co. to plan a $1 billion global bond offering aimed primarily at European and U.S. investors, a company spokesman said yesterday.
Stan Igaki, manager of investor relations at Panasonic Finance, said Matsushita company hopes to launch its offering between July and late September, subject to Securities and Exchange Commission approval. Panasonic is one of Matsushita's brand names.
"It depends upon the SEC at this juncture," Mr. Igaki said.
Proceeds will be used to repay some debt incurred from Matsushita's approximately $6.1 billion acquisition of MCA Inc. in December 1990.
The company has applied to list the bonds on the London Stock Exchange.
In secondary trading yesterday, the high-grade market witnessed "complete chaos," one trader said.
"Clearly we were down with Treasuries," he added. Asked what caused the drop, the trader said the Street was just long on bonds.
The high-yield market held firm despite some sloppiness in the Treasury and stock markets. Trading was active during the morning hours, tapering off by afternoon. Among gainers was American Standard Inc.'s offering Wednesday, which added 1/2 point.
Yesterday, junk market sources said the higher yields sported by some recent issues were luring traditional high-yield buyers back to market.
Ornda Healthcorp issued $400 million of 12.250% senior subordinated notes due 2002 at par. Noncallable for five years, the notes were rated B3 by Standard & Poor's Corp. and B-minus by Moody's Investors. Service. Donaldson, Lufkin & Jenrette lead managed the offering. The deal was increased from $325 million because of strong demand.
Owens Corning Fiberglass issued a two-part offering totalling $300 million. Tranche A consisted of $150 million of 8.875% debentures due 2002. The noncallable debentures were priced at 99.855 to yield 8.897% or 150 basis points over comparable Treasuries. Tranche B consisted of $150 million of 9.375% debentures due 2012. The noncallable debentures were priced at 99.614 to yield 9.418% or 155 basis points over 30-year Treasuries. Moody's rates the offering Baa3, while Standard & Poor's rates it BBB-minus. Goldman, Sachs & Co. sole managed the offering.
Supermarkets General issued $200 million of 11.625% subordinated notes due 2002 at par. Noncallable for five years, the bonds were rated B3 by Moody's and B-minus by Standard & Poor's, Merrill Lynch & Co. managed the offering.
Duke Power issued $100 million of 7% first and refunding mortgage bonds due 2000. The noncallable bonds were priced at 99.033 to yield 7.50% or 36 basis points over-comparable Treasuries. Moody's rates the offering Aa2, while Standard & Poor's rates it AA. Lehman Brothers won competitive bidding to underwrite the offering.
Moody's yesterday confirmed all ratings on Salomon Inc.
"This confirmation completes a review begun on August 15, 1991, when Salomon Brothers, Salomon Inc.'s securities subsidiary, disclosed irregularities in its U.S. Treasury securities trading operation," the agency said in a release.