Ontario Hydro sold $2 billion of Canadian dollar global bonds yesterday -- the biggest single issue the market has seen in its one and a half years of existence.
"We felt there was sufficient demand in the international market to do a successful 10-year global Canadian dollar bond issue," said Paul C. Newby, assistant treasurer of financing at the Toronto-based utility.
Ontario Hydro was the first company to issue Canadian dollar global bonds in a deal priced in December 1990. The current issue is it's sixth.
The utility yesterday issued $2 billion Canadian approximately $1.176 billion U.S., of 9% global bonds due 2002. The bonds were priced at 99.825 to yield 9.019%, a spread of 68 basis points over 10-year Canadian government securities.
The bonds "provide international investors with a liquid alternative to Governement of Canada bonds with a very attractive yield pick-up," he said.
Ontario Hydro sold its bonds in Europe, the Far East, the United States, and Canada, Mr. Newby said. Approximately 45% of the bonds were sold in North America, and about 55% in Europe and Asia, he noted.
Moody's Investors Service rates the offering Aa2, while Standard & Poor's Corp. rates it AA.
Goldman Sachs International Limited, Merrill Lynch & Co., Nomura International and Wood Gundy Inc. co-lead managed the offering, Mr. Newby said.
Mr. Newby was unsure whether Ontario Hydro would return to the market again this year, but said the utility plans to tap the Canadian dollar global market in the future when market conditions are right.
"This in actuality completes about 90% of our borrowing requirements for the calendar year," Mr. Newby said.
Proceeds from the offering will be used for general corporate purposes, he said.
In secondary trading, high-yield bond prices sank sharply yesterday, losing about 1 1/2 points on concern over the effects gambling in Louisiana would have on Atlantic City, one trader said. By a narrow 53-to-50 margin, the Louisiana House has reportedly approved a building authorizing one gambling casino in New Orleans.
High-grade bond prices finished unchanged in quiet trading.
In other news, West Point Acquisition Corp. yesterday said it had filed for a prepackaged Chapter 11 bankruptcy plan for itself and its wholly-owned subsidiaries, West Point Subsidiary Corp. and West Point Tender Corp.
Bed linen and bath towel maker West Point-Pepperell Inc., which is about 95% owned by West Point Acquisition and its subsidiaries was not included in the filing, according to a release issued by the company yesterday.
Holders of 100%, 95% and 94% respectively of the impaired debt classes who voted on the reorganization plan approved it. West Point's release says. Of the holders of impaired equity interests who voted. 100% accepted the plan. Those percentages exceeded bankruptcy law requirements for confirmation of the proposed reorganization plan.
West Point-Pepperell is the nation's top domestic producer in the bed linen market, the release says.
Public Service Electric & Gas issued a three-part competitive offering totalling $600 million. Part one consisted of $250 million of 6% first and refunding mortgage bonds due 1995 at par. The noncallable bonds were priced to yield 39 basis points over comparable Treasuries. First Boston Corp. won competitive bidding to manage the offering.
Part two consisted of $150 million of 6.875% first and refunding mortgage bonds due 1997. The noncallable bonds were priced at 99.762 to yield 6.931% or 40 basis points over comparable Treasuries. Merrill Lynch won competitive bidding to underwrite the offering.
The third part consisted of $200 million of 8.5% first and refunding mortgage bonds due 2022. Noncallable for five years, the bonds were priced at 98.713 to yield 8.62% or 79 basis points over comparable Treasuries. J.P. Morgan Securities Inc. won competitive bidding to manage the offering.
Moody's assigned a rating of A2 to all three tranches, while Standard & Poor's assigned an A.
Comodisco Inc. issued $159.5 million of 6.50% notes due 1994. The noncallable notes were priced at 99.89 to yield 6.56% or 150 basis points over comparable Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it BBB. Merrill Lynch managed the offering.
Chemical Banking Corp. issued $100 million of floating rate notes due June 16 1994 at par. The notes float quarterly at 30 basis points over the London Interbank Offered Rate and pay quarterly. Lehman Brothers sole managed the offering. Moody's rates the offering Baa2, while Standard & Poor's rates it A-minus.
Standard & Poor's has upgraded Southern Union Co.'s senior unsecured debt to BBB-plus from BBB-minus and its preferred stock to BBB from BB-plus, the agency said in a release. Total debt affected is about $113 million.
"The company's financial ratios are expected to improve to well within the benchmarks for higher ratings as a result of improved gas prices, reduced operating costs, and moderate but regular rate increases," Standard & Poor's release says.