Investor interest in the junk bond market has risen in this year as interest rates have dropped, fueling Bankers Trust's underwriting business.
With the long-bond hovering around 6%, investors are willing to assume sizable risk for higher yield. Some junk bond issues carry 14% coupons.
And investors say that certain issues have had an improvement in credit quality, somewhat reducing their risk.
Manager on 2 Giant Deals
This year, BT Securities, a unit of Bankers Trust New York Co., has underwritten over $7 billion in high-yield securities.
The bank has been the lead manager for two years of this year's largest deals.
It underwrote a $650 million offering of senior subordinated notes and senior subordinated discount debentures for American Standard Inc.
And if managed a $659 million offering of senior subordinated notes and senior subordinated discount debentures for Gaylord Container.
According to IDD magazine, Bankers Trust ranks seventh in high-yield financings for the first half of 1993.
The bank ranks among the top three underwriters for high-yield debt securities rated B or below, according to IDD. These are the lowest grades of junk bonds.
In the past two years, the bank has underwritten $15 billion in junk bonds.
According to Bankers Trust, investors are looking for high yields and strong capital appreciation.
Some 300 institutional investors and issuers of junk bonds are gathered this week in Arizona at a Banker Trust conference on the securities.