It's road show madness in the high-yield market, with 30 shows for $4.4 billion of deals falling between Nov. 22 and Friday.
"That's the most that I can think of in recent memory," said Ed Mally, director of high-yield research at Salomon Brothers Inc. Most of the deals range from $50 million to $250 million, he said.
Mally expects "a pretty busy time" in the new-issue market until roughly two weeks before Christmas.
Junk issuers sent at least eight deals with proceeds totaling more than $1 billion into last week's holiday-shortened session.
"We bought the Burlingtons and the Wheeling-Pitts," said Fred Cavanaugh, vice president and portfolio manager of John Hancock's $345 million Strategic Income Fund.
Cavanaugh also bought some of Anchor Glass Container Corp.'s $200 million deal priced Wednesday.
"Burlington has some yield to it, which is unusual in this market," Cavanaugh said. "High yield in a high-yield market -- that's unusual. these days."
Burlington Motor Holdings offered $100 million of 11.5% senior subordinated notes due 2003 at par.
Cavanaugh said he believes Burlington has "passed the trough of their cycle." As the economy improves, the transportation sector will improve as well, he said.
Wheeling-Pittsburgh Steel Corp's offering, which was increase to $325 million from $250 million, consisted of 9.375% notes at par.
"Wheeling, we just like the credit," Cavanaugh said. He also purchased Anchor's debt because he likes the credit. The name is one that another John Hancock fund has owned before, he said.
Other deals "either didn't have the yield that we need for this portfolio or were turned down for credit reasons," Cavanaugh said.
Expected to arrive this week is Westpoint Steven's two-part offering, a $600 million package being handled by Donaldson, Lufkin & Jenrette Securities Corp. The offering consists of $200 million of senior notes due 2001 and $400 million of senior subordinated notes due 2005.
In other news Wednesday, Philip Morris Cos. announced a restructuring that would trim roughly 14.000 jobs and downsize or close about 40 manufacturing and other facilities in the next few years.
Philip Morris expects the plan to start lowering operating costs in 1994, and yield about $600 million in annual after-tax savings by 1997, according to a company release.
Asked whether the news would move the company's bonds, one trader said: "If there was a market in it I could tell. The stock's up."
Another trader said that while reaction was difficult to gauge with the light trading on Wednesday, bonds will probably move later.
Overall, in secondary trading spreads on high-grade issues ended unchanged.
Bonds of the Province of Ontario and provincial guaranteed Ontario Hydro widened one or two basis points initially on news that Standard & Poor's Corp. had downgraded their long-term debt ratings to A-A-minus from AA, one trader said. The bonds rebounded to end unchanged, he said.
In a release, Standard & Poor's said: "The downgrade reflects the weakened resolve of the Ontario government to take unpopular expenditure adjustments in order to deficit targets in 1993-1994 in the face of unexpected revenue deterioration, as well as the prospect that deficit targets for succeeding years as outlined in the province's medium-term plan will also be missed." Junk also finished a quiet day unchanged.
New Issues
Anchor Glass Container Corp. issued $200 million of 9.875% senior subordinated debentures due 2008 at par. Noncallable for seven years, the notes were rated B2 by Moody's Investors Service and B by Standard & Poor's. Donaldson Lufkin was lead manager.
Province of New Brunswick issued a two-part offering totaling $54 million. The first tranche consisted of $22 million of 5.5% notes due 1998. The noncallable notes were priced at 99.771 to yield 5.553 to yield 41 basis points more than comparable Treasuries.
The second tranche consists of $32 million of 7.125% notes due 2002. The noncallable notes were priced at 105.419 to yield 6.312% or 50 basis points more than comparable Treasuries. Moody's rates the offering A1, while Standard & Poor's rates it AA-minus. Salomon Brothers was sole manager.
