Grand Union Co. yesterday said it will issue $800 million of notes and may sweeten its buyback offer for some 13% notes, the company announced yesterday.

"It's doable, but it's definitely a lot of cash to raise for one highly leveraged company, which it is," said Steven Ruggiero, a vice president at Donaldson, Lufkin & Jenrette Securities Corp.'s high-yield research group.

"They are a very strong management group," Mr. Ruggiero added. "I do think highly of them."

Grand Union said in a release yesterday that the company had filed a registration statement with the Securities and Exchange Commission to offer $325 million of senior notes due 2000 and $475 million of senior subordinated notes due 2002.

The company plans to make the offering in connection with the previously announced recapitalization of Grand Union and its parent corporations, GU Acquisition Corp. and GND Holdings Corp., the release says.

Goldman, Sachs & Co. and B.T. Securities Corp. will underwrite the deal, the release says.

Also related to the recapitalization, GND Holdings yesterday said it intends to increase its purchase price for all of GND Holdings' $200 million of outstanding 13% senior subordinated notes due 1998. The offer price is currently $106 for each $100 principal amount. It hinges on a successful recapitalization, a GND release says.

How much GND Holdings will increase the price remains undetermined. The company also reserves the right to raise it, the release says.

The 120-year-old food retailer operates 304 food stores under the Grand Union and Big Star trade names in eight Eastern states, according to the company release. The stores are located in the Northeast and the Atlanta area.

Mr. Ruggiero said Grand Union has "a good strong store base in the Northeast, albeit a weaker store base in the Atlanta division."

"Net net, the company has seen its best cash flow growth in the past couple of years," he said.

Though room for cash flow growth remains, it will not occur as rapidly, Mr. Ruggiero said. In order to delever in any significant way, Grand Union needs an increase in food price inflation, he explained.

Gary D. Hirsch, Grand Union's chairman of the board, could not be reached for comment yesterday. Mr. Hirsch's leveraged buyout firm, Miller Tabak Hirsch + Co., where he is managing general partner, and Salomon Brothers Inc. took Grand Union private in 1989.

Other high-yield deals on deck include Leucadia National Corp.'s $100 million of senior subordinated notes due 2002 through Jefferies & Co., which were expected to be issued tonight. Talk on that offering is 10-3/8% to 10-1/2%. Interlake Inc.'s $200 million offering, for which price talk is 11-3/4% to 12%, is expected Wednesday. Heritage Media's $150 million deal and Anchor Glass's $100 million Rule 144A offering are expected Thursday.

In secondary trading yesterday, high-grade bond prices finished up about 1/8 point. High-yield bonds finished largely unchanged in quiet activity.

Yesterday's Issues

Household Finance Corp. issued $100 million of noncallable floating-rate notes due June 15, 1993. Priced initially at par, the notes float monthly at 15 basis points over the 30-day commercial paper rate. Moody's Investors Service rates the offering A3, while Standard & Poor's Corp. rates it A. Lehman Brothers sole managed the offering.

Arizona Public Service issued $100 million of 7.625% first mortgage bonds due 1999. The noncallable bonds were priced at 99.732 to yield 7.675% or 73 basis points over comparable Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it BBB. Goldman Sachs lead managed the offering.

Yesterday's Ratings

Standard & Poor's has assigned a BBB-minus rating to Southwest Gas Corp's $100 million of Series F debentures due 2002. The rating agency also affirmed Southwest's BBB-minus senior unsecured debt. The company's outstanding debt totals approximately $700 million.

"The ratings on Southwest Gas reflect its currently weak financial results, and the difficult regulatory environment encountered by its gas distribution unit and its savings and loan operation, Primerit Bank," a Standard & Poor's release says. "R tings are supported by the gas utility, where frequent filings are needed to recover the cost of heavy growth in Nevada and to offset regulatory lag in Arizona.

Duff & Phelps Credit Rating Co. has given a preliminary rating of BBB to the $750 million senior debt piece of Bank of Boston Corp.'s $1.05 billion shelf registration. The agency has also assigned a BB-plus rating to the $300 million preferred stock portion. The ratings are the same ones that apply to the bank's outstanding securities, according to a Duff & Phelps release.

"The ratings reflect the recent upgrades which recognize the substantial progress made in strengthening balance sheet measures including loan quality, reserve levels and capitalization, as well as the improvement in core profitability," the release says.

Standard & Poor's has downgraded Great American Communications Co.'s subordinated debt to CC from CCC and lowered subsidiary GACC Holdings Co.'s senior debt to CCC from B-minus.

"These ratings actions, affecting about $97 million of total rated debt, are based on S&P's concerns about the consolidated company's near-term debt maturities and imminent refinancing needs," a Standard & Poor's release says.

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