High-grade corporate bond prices inched higher but finished flat as players warmed benches yesterday.
"You have both sides sitting on the sidelines, nobody's on the field," one trader said. "It's like halftime. "
At least part of what's keeping buyers and sellers idle is "a lot of uncertainty after the Marriott deal last week," he said.
As was widely reported, a group of Marriott Corp. bondholders are banding together in a bid to stop the company from splitting and saddling one company with the lion's share of Marriott's debt.
New issues have subsided with the backup in interest rates, the trader said. Some issuers also appear to be waiting for the Federal Reserve to ease credit policy, he said.
According to Mike Bassett, a vice president at Princeton, N.J.-based Stone & McCarthy Research Associates, issuance does appear to be off this week compared with last week.
"I think it's just a little bit more about the backup in rates than it is the Fed," Bassett said.
He counted $5.14 billion of new issues priced last week compared with slightly more than $2 billion for this week as of late afternoon yesterday.
Bassett's totals are for straight corporate debt, including agency issues and junk, but excluding mortgage and asset-backed issues as well as medium-term notes.
Although less new paper made its way to market this week, supply still weighs heavy on the market, a second trader said.
"The supply pressure is still there, though not as much from new issues as it is from dealer inventories," he said.
High-yield bonds finished unchanged to slightly lower "with the stock market coming in," one trader said. The Dow Jones industrial average lost 20.80 points yesterday.
In other news, Intermark Inc. said it missed a $2.2 million semi-annual interest payment yesterday on its 7 3/8% convertible subordinated debentures due 2007 of which $59.5 million principal amount is outstanding, a company spokesman said. The LaJolla, Calif.-based company said it and its wholly owned subsidiary Triton Group Ltd. are continuing talks with bondholder committees on reorganization plans for the two companies. On June 1, Triton missed a payment on two series of its bonds. Those two series total $125 million.
The spokesman said Intermark and Triton hope to reach agreement with bondholders by Oct. 20 when a forbearance agreement with one of the companies major creditors expires.
Pacific Gas & Electric issued $400 million of 8.25% first and refunding mortgage bonds due 2022. Noncallable for 10 years, the bonds were priced at 98.032, to yield 8.43%, or 93 basis points over comparable Treasuries. Moody's Investors Service rates the offering Al, while Standard & Poor's Corp. rates it A. First Boston Corp. lead managed the offering.
Associates Corp. of North America issued $300 million of 6.75% notes due 1999. The noncallable notes were priced at 99.847, to yield 6.777%, or 79 basis points over comparable Treasuries. Moody's rates the offering Al, while Standard & Poor's rates it AA-minus. Goldman, Sachs & Co. lead managed the offering.
Province of Manitoba issued $250 million of 6% debentures due 1997. The noncallable debentures were priced at 99.599, to yield 6.094%, or 70 basis points over comparable Treasuries. Moody's rates the offering Al, while Standard & Poor's rates it A-plus. First Boston Corp. lead managed the offering.
ITT Rayonier Inc. issued $110 million of 7.50% notes due 2002. The noncallable notes were priced at 99.375, to yield 7.59%, or 115 basis points over comparable Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it A-plus. Morgan Stanley & Co. lead managed the offering.
Federal Farm Credit Bank issued $110 million of 4.55% debentures due 1995 at par. The noncallable debentures were priced to yield 11 basis points over comparable Treasuries. First Boston Corp. sole managed the offering.
CIT Group Holdings issued $100 million of floating-rate medium-term notes due Nov. 1, 1993, at par. The noncallable notes float monthly at 255 basis points under the prime rate and pay quarterly. Moody's rates the offering Al, while Standard & Poor's rates it A-plus. Goldman, Sachs & Co. sole managed the offering.
West Texas Utilities issued a two-part first mortgage bond offering totaling $75 million. The first tranche consisted of S35 million of 6.875% bonds due 2002. The noncallable bonds were priced at 99.391, to yield 6.96%, or 50 basis points over comparable Treasuries. The second consisted of 40 million of 7% bonds due 2004. The noncallable bonds were priced at 99.316, to yield 7.085%, or 62.5 basis points over comparable Treasuries. Moody's rates the offering Aa2, while Standard & Poor's rates it AA-minus. First Boston Corp. lead managed the offering.
Standard & Poor's yesterday affirmed Ford Motor Co., Chrysler Corp., and General Motors Corp.'s ratings.
"Despite a continuation of anemic domestic automotive demand and dim prospects for an acceleration in the pace of the economic recovery, the Big 3 automakers face divergent prospects for ratings changes," a Standard & Poor's release says.
The agency said Ford's rating outlook is revised to stable from negative, Chrysier's outlook was recently revised to positive from stable, and Gm's outlook remains negative.
"In the case of GM, cost-cutting efforts at its core domestic automotive operations have been accelerated since late 1991," Standard & Poor's' release says. "However, resistance to such efforts on the part of its work force has been problematic and could well intensify as the company approaches the September 1993 expiration of its current labor contract. "