Some R.H. Macy & Co. junk bonds fell about three to four points yesterday after the company showed a less-than-merry $155.4 million loss for its first quarter.
"It was a shocker," said one high-yield trader, who thought the figure would be more in line with last year.
Last year's loss for the same period was $56.5 million, a Macy's spokesman said. The company's first quarter ended Nov. 2.
Macy's zero coupon bonds lost about three points to trade at about 31 1/2 cents on the dollar, traders said.
The news, combined with what's shaping up to be an disappointing Christmas season for retailers, pushed the bonds lower, he said.
Robert Lupo, head of high-yield research at PaineWebber Inc., said while the loss proved worse than he expected, he remains optimistic about the credit.
"It does not change my positive view on the situation since this is only one quarter and it's a very tough environment," Mr. Lupo said.
Macy's bonds recorded their 1991 peaks to date in October with the 14 1/2s of 98 trading in the 84 to 85 range, the 14 1/2s of 01 of about 75 and the zeros at about 53, Mr. Lupo said. Yesterday afternoon found the 14 1/2s of 01 trading in the 50 to 53 range and the 14 1/2s of 98 in the 60 to 63 range.
While the zeros were at 31 1/2 yesterday, that was still up from the low of 28 to 30 the bonds recorded Dec. 5 and 6, he said. Later in the day, however, a high-yield trader said the zeros were trading in the 29 to 31 range.
In secondary trading, high grades lost 1/4 point after the Federal Reserve signaled it was holding monetary policy steady by draining reserves with overnight matched sales. It later regained the 1/4 point and a bit more, but ended the day unchanged.
The market has been waiting for the Fed to cut its discount and funds rates and despite yesterday's disappointment, many traders said they thought the move might occur today.
Also yesterday, Citibank spokeswoman Maria Rulio dispelled a market rumor tht the bank would announce a $3 billion write off against its real estate portfolio.
As for new issues yesterday, the Student Loan Marketing Association issued $500 million of floating rate notes due 1994. Priced at par, the notes float weekly at 30 basis points over three-month Treasury bills. They pay quarterly. Lehman Brothers lead managed the offering.
The Federal National Mortgage Association issued $300 million of 7.55% medium-term notes due 2001. The notes, noncallable for three years, were priced initially at 99 31/32 to yield 37.5 basis points over comparable Treasuries. Goldman, Sachs & Co. sole-managed the ovfering.
Security Pacific Corp. issued $150 million of 7.750% notes at par. The noncallable notes due in 1996 were priced to yield 152 basis points over comparable Treasuries. Moody's Investors Service Inc. rates the notes A3, while standard & Poor's rates them A-minus. Goldman Sachs lead managed the offering.
In rating activity yesterday, Moody's said it is reviewing Union Carbide Corp.'s debt ratings for a possible downgrade.
Union Carbide's announcement of plans to spin off the industrial gases business to its stockholders and to sell certain non-strategic assets from its chemicals and plastics business prompted the review, Moody's said.
The agency is reviewing the following ratings: Union Carbide Corp.'s Baa2 notes, debentures, and tax exempt issues; provisional Baa2 shelf registration of three senior note issues; Baa3 senior subordinated notes; Ba1 convertible subordinated debentures; and the Prime-2 commercial paper rating.
Also under review is DCS Capital Corp.'s Baa2 guaranteed notes. In addition to Union Carbide, Dow Chemical and Shell Canada Ltd. are guarantors.
Duff & Phelps Credit Rating Co. yesterday assigned an AA-plus rating to American Telephone & Telegraph Co.'s $2.5 billion shelf registration of notes and warrant, the agency said. Duff & Phelps said the same rating applies to $5.2 billion of AT&T currently outstanding notes and debentures.
Standard & Poor's downgraded USG Corp.'s 7.375% senior notes to D from CC after a missed $100 million maturity payment due Dec. 15. The agency removed the rating from CreditWatch where it was placed with negative implications last January.
The CC rating on the company's other senior debt issues, the C rating on its subordinated debt, and the CC rating on unit U.S. Gypsum Co.'s senior debt remain on CreditWatch for a possible downgrade. About $1 billion worth of debt is affected. Interest payments on the 7.375% notes and other senior public debt issues remain current.