Deals by Eagle Industries Inc. and Levitz Furniture Corp. on Friday helped proceeds from new junk issues top $1.5 billion last week.
"I think most of the deals were well received," said Kingman Penniman, an executive vice president at Duff & Phelps/MCM Investment Research Co.
The reception is indicative of how much cash is coming into the market, he said. Asked where that cash is coming from, Penniman replied "everywhere."
He cited the Eagle Industries deal, which yielded 10 1/2% when 10 3/4% to 11% was expected. Penniman also pointed to US Air's $300 million offering Wednesday, which was doubled from $150 million.
Eagle Industries issued $315 million face amount of zero coupon notes due 2003. The securities, which switch to paying interest after five years, were priced at 59.897 for a 10.50 yield to maturity.
They are callable after five years at par, and at 110 in the first three years if the company does an initial public offering. Merrill Lynch & Co. was lead manager of the offering, whose proceeds total about $189 million.
Levitz Furniture Corp. issued $1 00 million of 9.625% senior subordinated notes due 2003 at par. The offering is callable after five years at 102.75, then at 101.375 in 1999, and at par in 2000. Moody's Investors Service rates the offering B2, while Standard & Poor's Corp. rates it B-minus. Donaldson, Lufkin & Jenrette Securities Corp. managed the offering, whose amount was increased from $85 million.
This week, the market expects Outlet Broadcasting's $60 million of senior subordinated notes due 2003 and Parisian's $110 million of senior subordinated notes due 2003.
In secondary trading Friday, spreads on corporate bonds were a touch wider to Treasuries owing to the government market's rally and some supply pressure.
"It's not dramatic," one trader said. The trader said spreads on bank and finance company issues were about five basis points wider, while Yankee and Canadian issues were maintaining their spreads. Long utilities were about three basis points wider.
In trading Friday, junk bonds were quiet and unchanged.
Moody's Investors Service upgraded Chemical Banking Corp.'s senior debt to A3 from Baal and subordinated debt to Baal from Baa2.
Moody's also raised the corporation's preferred stock rating to "a3" from "baa2." In addition, Moody's upgraded ratings for the long-term deposits of Chemical Banking Corp.'s subsidiary banks, including Chemical Bank and Texas Commerce Bank N.A., to A1 from A2. On April 22, Moody's placed the ratings of Chemical Banking Corp. and its subsidiaries under review for possible upgrades.
A press release from Moody's says "the upgrades followed [the credit agency's] assessment of the future earnings trends of Chemical, and the progress of the corporation in reducing its substantial portfolio of impaired loans. Substantial provisions have been taken against non-performing assets in past quarters, and the level of reserves is much improved. Furthermore, inflows of new non-performers are declining."
About $8 billion of securities are covered by the new ratings.
Standard & Poor's said IMC Fertilizer Group Inc.'s B senior and subordinated debt ratings along with IMC Fertilizer Inc.'s BB-minus senior industrial revenue bonds remain on CreditWatch where they were placed on May 28.
"The CreditWatch status will be resolved following management discussions focusing on the final details of the recently completed financing and phosphate joint venture as well as remaining litigation issues," Standard & Poor's said in a release.
IMC's implied senior rating is BB-minus. Approximately $290 million of rated debt is affected.
According to Standard & Poor's, IMC recently announced the successful completion of a $260 million financing, proceeds of which repaid $100 million of bank debt, $50 million of receivables previously sold, "and, importantly, paid the $60.6 million portion of the recent settlement with Angus Chemical Co. that was due June 30, 1993."
The release also said IMC has finalized formation of a joint venture with Freeport-McMoran Resource Partners, which Standard & Poor's expects to yield "significant cost savings."