Corporations may unleash a hefty amount of debt this week, according to Michael Bassett, a vice president at Stone & McCarthy Research.
"I think we're looking at on the order of another $4 billion week," he said.
A week where straight debt totals $4 billion "is your basic big week now," he said, adding that 1991 has already been a big year for issuance.
With nine issues totaling $2.076 billion, Thursday marked the eigth day this year that straight debt new corporates met or came in better than the $2 billion mark, said Joe Miller, an associate at Securities Data Co.
"Rates, rates, rates" are the reason Mr. Bassett expects issuers to tap the market this week.
"You just can't go wrong with rates where they are and spreads where they are if short-term money is attractive," he noted. "It's a very clear opportunity."
But the scenario is different for long-term issuers, he said.
"Anybody who would like long money has a decision to make," Mr. Bassett said. Some corporations may be betting that long-term rates will drop still further.
Friday drew several high-grade issuers to market.
Mobil Corp. issued $200 million of 6.5% notes due 1996. The non-callable notes were priced at 99.920% to yield 6.52% or 30 basis points over comparable Treasuries. Moody's Investors Service rates the offering Aa2, while Standard & Poor's Corp. rates it AA. Morgan Stanley & Co. lead managed the offering.
CIT Group Holdings Inc. issued $200 million of noncallable floating rate notes due in 1992. Priced initially at par, the notes float daily at 245 basis points under prime and pay monthly. Moody's rates the offering A1, while Standard & Poor's rates it A-plus. Goldman, Sachs & Co. sole managed the offering.
PepsiCo Inc. issued $150 million of 5,875% notes due 1994. The noncallable notes were priced at 99.742 to yield 5.970% or 47 basis points over comparable Treasuries. Moody's rates the notes A1, while Standard & Poor's rates the A. Lehman Brothers managed the offering.
United Airlines Inc. issued $150 million of 9% noncallable notes due 2003. The notes were priced at 99.763 to yield 9.033% or 180 basis points over 10-year Treasuries. Moody's rates the offering Baa2, While Standard & Poor's rates it BBB. Salomon Brothers Inc. lead managed the offering.
Hillenbrand Industries Inc. issued $100 million of 8.50% debentures due 2011. The noncallable debentures were priced at 99.899 to yield 8.51% or 75 basis points over 30-year Treasuries. Moody's rates the offering A1, while Standard & Poor's rates A-plus. Lehman Brothers lead managed the offering.
Commercial Credit Co. issued $100 million of 6.250% notes due 1995. The noncallable notes were priced at 99.971 to yield 6.263% or 75 basis points over three-year Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. J.P. Morgan Securities Inc. lead managed the offering.
In secondary-market trading, high-grade corporates were unchanged to up slightly Friday.
"It's waffling around," one highgrade trader said. "I don't think much is happening in corporates today."
The high-yield market was off 1/2 point or more over all. As for new high-yield issues, Playtex Family Products is expected to price its $150 million debt offering Wednesday.
In Friday's rating actions, Standard & Poor's downgraded Bonneville Pacific Corp.'s subordinated debt to D from CCC-minus and removed it from Credit Watch, where it was listed Nov. 12. Bonneville on Thursday filed a petition for protection under Chapter 11 of the Bankruptcy Protection Code.
"The action was not unexpected given the severe liquidity problems that developed subsequent of Portland General Corp.'s withdrawal of financial support last month," Standard & Poor's said in a release.
Duff & Phelps Credit Rating Co. assigned an AA-plus rating to American Telephone & Telegraph Co.'s $676 million offering of 8 5/8% notes due 2031. The same rating applies to $5.2 billion of AT&T's currently outstanding notes and debentures.
"This rating of AT&T and AT&T subsidiary debt reflects the excellent cash flows AT&T's long distance business generates as well as AT&T's position as the leading provider of telecommunications equipment to other telecommunications companies and users," a Duff & Phelps release said.