Yesterday proved calm after last week's $9.7 billion new-issue storm, but several competitively bid offerings are expected this week.
"I think a lot of paper is being digested right now from last week," one syndicate official said. "If the government market holds, I think you'll see a repeat" this week.
A trader agreed that last week's heavy inventory was not weighing down the market. "A lot of accounts have cash," he said.
Expected to accept bids this week on new issues are Northern Illinois Gas Co., Mississippi Power Co., South Jersey Gas Co., and Alabama Power Co.
Northern Illinois Gas is expected accept bids today for $50 million of 30-year first mortgage bonds.
Edgar Gilmore, corporate secretary at Mississippi Power, said the utility expects to sell $35 million of 30-year debentures through competitive bidding at 9 a.m., central time, today. The debentures are nonrefundable for five years, he said.
South Jersey Gas plans to offer $35 million of 20-year first mortgage bonds through competitive bidding under Rule 144A, a source familiar with that offering said. The utility chose the private placement market because the issue was small, a number of sophisticated institutional investors have shown interest in it, and South Jersey wanted to avoid the costs associated with a public bond offering, the source said.
John Snyder, assistant corporate secretary at Alabama Power, said, "Yes, we do have tentative plans to sell bonds." While the offering would be through competitive bidding, Snyder said he had no further details.
Elsewhere yesterday, Prudential Securities said Peter J. Horan has joined the firm as managing director and head of high-yield investment banking.
The 41-year-old Horan comes to Prudential from Merrill Lynch & Co., where he served as a managing director in the high-yield department, a Prudential press release says.
Horan's responsibilities at Prudential include new business solicitation, structuring and pricing non-investment grade securities, and executing public and private high-yield offerings.
"The addition of Peter Horan to our investment banking team demonstrates Prudential Securities' continuing commitment to the high-yield area," Woody Knight, president of investment banking, said. "Peter's investment banking skill and expertise, coupled with our established high yield sales and trading capabilities, will be a great addition to the firm. "
At Prudential, Horan will report to Paul Scura, managing director and head of product groups in the firm's investment banking division, the release says.
Horan started his career at Merrill Lynch in 1977 in the investment banking area. Horan was a managing director in that firm's high-yield department from 1986 to 1992.
In secondary trading yesterday, spreads on high-grade bonds were mostly unchanged. One trader said that if anything, he expected to see some slight widening due to the government market's rally. High-yield bonds ended a quiet day unchanged, with Trump Plaza Funding's recent offering up about a point.
Southwestern Bell Telephone Co. issued $250 million of 7% debentures due 2015. The noncallable debentures were priced at 98.75 to yield 7.113% or 35 basis points over 30-year Treasuries. Moody's rates the offering Al, while Standard & Poor's Corp. and Duff & Phelps Credit Rating Co. A-plus. Goldman, Sachs & Co. lead-managed the offering.
Federal National Mortgage Association issued $175 million of 6.05% medium-term notes due 2003 at par. The noncallable notes were priced to yield 15 basis points over comparable Treasuries. Morgan Stanley & Co. reportedly managed the offering.
Pennsylvania Power & Light Co. issued $125 million of 6% first mortgage bonds due 2000. The noncallable bonds were priced at 99.83 to yield 6.03% or 49 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's and Duff & Phems rate it A. First Boston Corp. lead-managed the offering.
Federal Home Loan Banks issued $28 million of 6.070% medium-term notes due 2003 at par The noncallable notes were priced to yield 16 basis points over comparable Treasuries. Morgan Stanley & Co. reportedly managed the offering.
Standard & Poor's has changed its ratings outlook to negative from stable on the Province of Newfoundland and Newfoundland & Labrador Hydro
The rating agency affirmed its Aminus rating on the province, and the debt of Newfoundland & Labrador Hydro, which the province guarantees.
"The outlook revision reflects the possibility of further deterioration in the debt burden and fiscal flexibility if the difficult economic conditions of the past year do not improve as anticipated, " a Standard & Poor's release says.