Bankers Trust New York Corp. has been in the middle of the fray as a flurry of junk bond issues for media companies hit the market.
Observers said the junk bond game is suddenly more challenging. The players now include commercial banks as Bankers Trust, Chase Manhattan Corp. and J.P. Morgan & Co. in addition to the investment banks that have dominated the market in the past.
The spate of similar offerings has arrived just when some investors are growing choosier and others are on vacation, observers said.
"The market is a little tricky, and we're seeing a bit of the August doldrums," said Arthur Penn, a managing director in Bankers Trust's high- yield-securities unit, which last week brought a $196.7 million issue to market for International Wireless Communications.
Indeed, the largest junk bond deal this week, for Sprint Spectrum, had to be reduced to $520 million from $650 million.
Some investors who normally would buy high-yield deals, expecting the companies to go public, were demanding greater returns, because the initial public offering market has slowed down.
Indeed, one analyst said, "It's a strong statement that Sprint Spectrum was able to come to market with a deal of that size at all."
The deal, led by Merrill Lynch and Lehman Brothers, helps raise start-up money for a wireless communications joint venture of Sprint Corp., Cox Communications, Comcast Corp., and Telecommunications International. The venture also has tapped the bank loan market for $2 billion.
Another analyst said that no fewer than five junk bond deals for the media sector have been pulled from the market in the past month.
Despite the choppy waters, junk bond deals continue to be launched at a rapid clip.
The supply-and-demand balance continues to favor the issuer, with a strong appetite from a wide range of mutual funds and institutional investors, Mr. Penn said.
Indeed, a number of commercial and investment banks have already underwritten more volume through the end of last week than they had through all of 1995.
Donaldson Lufkin & Jenrette, the top-ranked underwriter through this year and last, led $4.5 billion in deals through Aug. 11 of this year, as compared with $4 billion for all of last year, according to figures from Securities Data Co.
Chase Manhattan Corp., the fifth-ranked high yield underwriter this year, underwrote $1.8 billion in deals through Aug. 11, 56% more than last year's volume, according to Securities Data Corp.
Bankers Trust, the seventh-ranked underwriter, has led $1.5 billion in junk bonds through the end of last week.
BT Securities, the investment banking arm of Bankers Trust, is expected to price a private high-yield $100 million deal (known as a 144A transaction) Friday for Tokheim Corp., a Fort Wayne, Ind.-based manufacturer of gas pumps and gas pump dispensers.
Tokheim will use the funds for its acquisition of Sofitam SA, a French gas pump manufacturer.
While BT declined to comment on the particulars of the deal, market sources said that it will be priced at around 11.25%.
Bankers Trust placed two other high yield deals last week: a $175 million in senior notes for Royal Oak Mines Inc.; and the issue of senior secured discount notes for International Wireless Communications Holdings Inc.
"We've been a very active player in the market," Mr. Penn said, "and we look forward to a strong fourth quarter."
