A spate of issuers postponed junk bond offerings in the last two weeks because they were unhappy with the high prices demanded by skittish investors.

Pricing has been a problem for issuers ever since the high-yield market downturn last August, and some smaller companies reliant on junk bonds are starting to feel the pinch.

"We are working on contingency plans for the smaller deals that we have now, usually involving some combination of bank debt and mezzanine financing," said Art Penn, managing director in charge of global fixed- income capital markets for BT Alex. Brown, a unit of Bankers Trust Corp.

"This is one of the benefits of one-stop-shopping," he said, "being able to offer clients an alternative if the market goes against them."

Some issuers that are not in desperate need of capital have decided to postpone their offerings, hoping that pricing will improve.

This was the case at Standard-Pacific Co., a real estate developer in California and Texas, where executives postponed a junk bond offering last week because they did not like the pricing environment, according to market sources.

Donaldson, Lufkin & Jenrette Inc. was shopping $100 million of 10-year senior subordinated notes for the real estate company, which is a large public entity that did not need the cash right away.

Two other small deals were also delayed recently. International Rectifier Corp. postponed a $125 million high-yield offering led by Lehman Brothers, and Pentacon Inc. pulled a $125 million offering led by Merrill Lynch & Co.

Pentacon, a Houston parts distributor, came back to the market last week with a different underwriter, Bear, Stearns & Co., according to a market source.

At least two deals that left the junk bond market in recent weeks were intended to finance leveraged buyouts.

UBS Capital was floating a $125 million offering to buy Trustway Holdings, a Texas roofing maker. The deal was pulled Monday by underwriter Warburg Dillon Read, which also owns the private equity group, sources said.

Goldman, Sachs & Co. pulled a $100 million offering for C&H Sugar that was also intended to finance a buyout, according to a source.

Some sources speculated that the financial sponsors might increase their equity stake or tap the mezzanine market to complete the buyouts.

At least one company may have recently turned to the private equity market rather than issue high-yield debt. Morgan Stanley Dean Witter & Co. had been shopping a $225 million junk bond for Unisource Worldwide until last week, when that company was bought by natural resources firm UGI Group, sources said.

Though market observers said they have not yet seen a rise in the mezzanine market, some predicted that it may occur if the junk bond market continues to languish.

"I'm seeing the beginning of a shift to the mezzanine market," Mr. Penn said. "I think this is still a little ahead of the curve."

Average high-yield spreads over comparable Treasuries were 585 basis points at the end of February, according to the Donaldson, Lufkin & Jenrette high-yield index.

That was a slight improvement from the lofty junk bond spreads that have persisted since August, peaking at 735 basis points in October before declining to current levels, according to Donaldson.

But pricing remains far above the historically low spreads that prevailed from early 1997 until the high-yield market seized up in August. During that period, investors were only demanding three to four percentage points above Treasuries for a typical issue.

Of the 14 junk bonds that priced during the first 10 days of March, several came in above the average spread reported by Donaldson Lufkin.

The most expensive deal was a $150 million junk bond for the city of Buenos Aires, which priced last week at 744 basis points above comparable Treasuries, according to Securities Data Co.

The second-biggest premium was paid by Team Health Inc. of Knoxville, Tenn. The medical staffing provider issued $100 million of senior subordinated notes March 5, paying 659 basis points above Treasuries, according to Securities Data.

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