Orion Capital Corp. cut its junk offering Friday to $1100 million from $150 million.

"The company had announced on Aug. 3, 1992, that it planned to increase the senior note offering from $11 million to $150 million," the company said in a release issued late Friday. "The decision to revert to the smaller issue size reflects current market conditions."

When asked what the company meant by "market conditions," Orion spokesman Vincent T. Popa declined to elaborate beyond the press release.

Ronald V. Speaker, a portfolio manager at Denver-based Janus Capital Corp., liked Orion's offering. It offered "great call protection" and the split-rated credit is halfway toward being investment grade.

Orion Capital issued $110 million of 9.125% senior notes due 2002. The noncallable notes were priced at 99.873 to yield 9.144% or 250 basis points over comparable Treasuries. Merrill Lynch & Co. and Lehman Brothers managed the offering.

The speculative-grade Ba1 rating that Moody's assigned the offering rests just one notch below the rating agency's lowest investment-grade level, Baa3. Standard & Poor's rates it BBB-minus, its lowest investment-grade rating.

But Mr. Speaker admits the deal is not for everyone.

"It's an odd area of the credit spectrum," he said.

Some buyers are prohibited from buying split-rated deals, and others are waiting for more solidly BB deals offering higher yields. He said, however, that that's where the opportunity is.

Overall, last week's new-issue pace proved slow, and this week's roster shouldn't break any records, either.

"I wouldn't call this by recent standards an active week," Mike Bassett, a vice president at Stone & McCarthy Research Associates, said of last week's new-issue pace. IDD Information Services figures show 10 offerings totaling $4.2 billion. On Friday, Orion's deal would bring that to $4.3 billion.

Vacations and the upcoming Labor Day holiday should continue to sideline some issuers, he said.

"I think there's stuff piling up from September, but not this week," Mr. Bassett said.

Possibilities for this week include Temple-Inland Inc.'s two-part offering totaling $250 million, he said. The offering is expected to consist of a $100 million 10- or 12-year portion and a $150 million 30-year piece. Salomon Brothers and Dillon, Read & Co. will underwrite it.

Kaufman and Broad Home Corp. is expected to issue $100 million of senior notes due 1999 next week through Merrill Lynch & Co. and Goldman, Sachs & Co. Also through Merrill Lynch, American Re-Insurance Co. is expected to price a $350 million, 12-year senior subordinated deal. Clark Oil and Refining Corp. may also bring its $150 million offering consisting of 12-year senior notes through Goldman, Sachs & Co. and Kidder, Peabody & Co. A Transcontinental Gas deal is also out there, he said.

Other possibilities on deck, though not likely this week, are seven- and 10-year issues by Georgia Power and a $250 million 10-year offering by the United Mexican States.

In other news Friday, Owens-Illinois Inc. said it has called the remainder of its 12.75% subordinated debentures due 1999 for redemption. The company said it will redeem the $168.6 million aggregate principal amount of the debentures at a price of 106.375% of the principal amount plus accrued interest to the redemption date.

Owens-Illinois will fund the redemption with proceeds from its Aug. 14 public offering of $200 million principal amount of 9 3/4% senior subordinated notes due 2004. Leftover proceeds from the offering will be used to reduce senior debt. By using proceeds to redeem the 12.75% subordinated debentures and to reduce senior debt, Owens-Illinois says it can cut its annual pre-tax interest expense by about $3 million annually.

In secondary trading, "really nothing happened at all," in high-grade bonds Friday. One high-grade trader described the market as "snoozeville." High-yield bonds gained 1/8 to 1/4 point in the morning, went "dead" in the afternoon, but held on to finish 1/8 higher, traders said.

Friday's Ratings

Standard & Poor's has put U.S. Shoe Corp.'s BBB senior debt on CreditWatch for a possible down-grade. The agency also affirmed the company's A-3 commercial paper, which is not under review.

"The Watch listing reflects S&P's expectation that the company's earnings for 1992 will be significantly below last year's levels, and that measures of performance such as return on permanent capital and fixed-charge coverage will deteriorate," an agency release says.

Standard & Poor's has given a B rating to Adelphia Communications Corp.'s $125 million senior secured notes due 2004. The agency simultaneously affirmed the Adelphia senior discount note's B rating and senior subordinates notes B-minus rating. The implied senior rating is B-plus. Approximately $1.5 billion of debt is outstanding.

"Adelphia Communications Corp.'s ratings reflect the company's increased financial flexibility and somewhat less aggressive debt leverage," Standard & Poor's release says.

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