Issuers could serve up to $1.3 billion of new junk this week to a market hungry enough to give it a home, a high-yield analyst said yesterday.
"The market seems to be taking about $1 billion a week," said Kingman D. Penniman, an executive vice president at Duff & Phelps/Investment Research Co. "Sometimes it's more, sometimes it's less."
New issues totaled $3.5 billion in July, averaging about $875 million a week, Mr. Penniman pointed out.
Two high-yield offerings arrived yesterday. Seven-Up/RC Bottling Co. of Southern California Inc. issued $140 million of 11.50% senior secured notes due 1999 at par. Callable after five years at 103, the bonds were rated B3 by Moody's Investors Service and B-minus by Standard & Poor's Corp. Citicorp Securities Markets Inc. lead managed the offering.
Stone Container Corp. issued $125 million of 11% senior subordinated notes due 1999. The notes are callable after five years at 104. Moody's rates the offering B2, while Standard & Poor's rates it B-plus. BT Securities Corp. lead managed the offering.
Other issues expected to arrive this week include AMC Entertainment Inc., Continental Medical Systems Inc., and Caesars World Inc., Mr. Penniman said.
Less likely for this week are offerings by Specialty Retailers Inc., Harmon International Industries Inc., and Computer Vision Corp., Mr. Penniman said. An offering by Wainoco Oil Corp. is expected to be priced next Monday, one syndicate desk source added.
Various syndicate desk sources and others yesterday provide schedule and price talk information for the other offerings.
Price talk on AMC's two-part offering is is 11 3/4% on the $100 million of senior notes due 2000 and 12 1/4% on the $100 million of senior subordinated notes due 2002. Citicorp Securities Markets Inc. is managing the offering. The offering is expected today.
Continental Medical's $200 million senior subordinated notes due 2002 through Merrill Lynch & Co. as lead manager are expected to be priced at about 11%. The offering, expected to be priced today or Thursday, is rated B1 by Moody's and B-plus by Standard & Poor's
Price talk on Harmon International's $70 million of senior subordinated notes due 2002 through Lehman Brothers is 11 1/2 to 11 3/4. Talk on Specialty Retailers' $100 million of senior subordinated notes due 2002 through Lehman Brothers is expected at around 10 3/4%.
Price talk on Wainoco's $100 million of senior notes due 2002 through First Boston is 12% to 12 1/4%
Caesar's was expected to have a telephone road show yesterday for its $150 million senior subordinated note issue through lead manager Merrill Lynch. The 10-year offering, rated Ba3 by Moody's and BB-plus by Standard & Poor's, is expected to be priced by week's end. Caesar's notes are noncallable for five years.
In secondary trading, high-grade bond prices moved up with Treasuries, which gained 3/8 in the long end and 1/2 point in the 10-year sector. High-yield bond prices finished largely unchanged in quiet trading. R.H. Macy & Co.'s 14 1/2% senior subordinated debentures due 1998 lost about a point on bad earnings, one trader said.
Northwest Pipeline Corp. issued $150 million of 9% debentures due 2022. Noncallable for 10 years, the debentures were priced at 99.481 to yield 9.05% or 160 basis points over comparable Treasuries. A 5% sinking fund begins in the 11th year. Moody' rates the offering Baa3, while Standard & Poor's rates it BBB. First Boston Corp. lead managed the offering.
U.S. West Financial Services issued $100 million of 4.75% medium-term notes due 1994. The notes were priced at 99.914 to yield 4.80% or 45 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A-plus. Goldman, Sachs & Co. sole managed the offering.
Standard & Poor's upgraded Blockbuster Entertainment Corp.'s subordinated convertible liquid yield option notes due 2004 to BB from B-plus based on "the company's leading industry position, strong profitability, and improved cash-flow protection."
The implied senior rating is BBB-minus.
"These positive factors are tempered by Standard & Poor's concern about potential incursions into video retailing from pay-per-view technologies and risks associated with possible diversification outside the home video business." Standard & Poor's said in a release.
Standard & Poor's has raised Cascade Natural Gas Corp.'s senior unsecured debt to BBB-plus from BBB affecting about $65 million of debt, according to an agency release.
Simultaneously, the rating agency assigned a BBB-plus rating to Cascade's $100 million of medium-term notes filed under a Rule 415 shelf registration.
"Ratings for Cascade Natural Gas Corp. reflect the continued progress management has made to increase earnings stability and the expectation that financial measures will improve as the positive impact of the record customer growth over the last few years starts to get realized," the release says.