WestPoint Stevens Inc.'s $600 million deal is expected today or tomorrow, and demand is strong, junk sources said yesterday.

"My understanding is that the deal is going quite well," said Brian Johnson, a vice president and high-yield analyst at Citicorp Securities Inc.

Johnson said WestPoint's two-part offering through lead manager Donaldson Lufkin & Jenrette Securities to be oversubscribed and come at the low end of price talk.

Price talk on the nation's largest bed and bath textile manufacturer's $200 million of senior notes due 2001 is 8 7/8% to 9 1/8%. Talk on the $400 million of senior subordinated notes due 2005 is 9 1/2% to 9 3/4%.

"There's huge demand for the deal, and it looks like its going to get done at those price levels without too much problem," said Kevin Mathews, a portfolio manager at Van Kampen Merritt Inc. Mathews' fund plans to be among the purchasers. Randolph Birkman, portfolio manager of the Pilgrim Group's High Yield Trust, said: "My sense is that the market is interested in it because it is a cyclical issue."

Expectations are for a good fourth quarter, and, after some possible weakness early next year, the economy, is expected to continue to improve, which bodes well for cyclicals, Birkman said.

"I think fundamentally it's a strong credit," Citicorp's Johnson said. WestPoint has the highest operating margins of any company in the bed and bath textile manufacturing industry, he said.

The company currently has roughly 33% of the bed linens market, and about 31% of the bath towels market, Johnson said. In addition to having a strong market position, the company is also a low cost producer.

The low production costs are a result of the company's highly automated production equipment, Johnson said. WestPoint has invested approximately $340 million in a plant modernization program during the past five years.

According to spokesman Steven Anreder, WestPoint Stevens Inc. results from the blending of West Point-Pepperell Inc. and Valley Fashions Corp.

In 1989, a newly formed entity called West Point Acquisition Corp. acquired 95% of West Point- Pepperell via a stock tender offer, Anreder said. West Point Acquisition later filed bankruptcy, and emerged in September 1992 as Valley Fashions Corp. Valley Fashions had the 95% stake as its only asset, Anreder said,

Valley Fashions is now purchasing the remaining 5%, or 1.4 million shares, of West Point-Pepperell at $46 a share, he said.

While that should account for $66.3 million of upcoming offering's proceeds, the remaining funds will be used to refinance bank and long-term debt of both Valley Fashions and West-Point Pepperell, Anreder said.

Anreder said it is hoped that Valley and West-Point Pepperell will be. come WestPoint Stevens following a Dec. 10 shareholders meeting.

In secondary trading, high-yield bonds ended 1/8 to 1/4 point higher in light post holiday trading. Spreads oil high-grade issues ended unchanged.

Now Issues

Comerica Inc. issued $150 million of 7.125% subordinated bank notes due Dec. 1, 2013. Noncallable for 15 years, the notes were priced at 99.388 to yield 7.183%, or 80 basis points more than comparable Treasuries. Moody's Investors Service rates the offering A2, while Standard & Poor's Corp. rates it A-minus. Lehman Brothers Inc. was lead manager.

Federal Farm Credit Bank issued $50 million of 4.75% step-up medium-term notes due 1998 at par. The notes were priced to yield 25 basis points more than five-year Treasuries. They are noncallable for two years, after which the coupon steps up to 5.75%.

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