U.S. CORPORATE FINANCE - FINANCING SURGE SEEN
U.S. corporate treasurers are expected
to race to market this week, propelled by hopes that the recent
recoveries of the Treasury market and the dollar will whet
investors' appetities for new issues, underwriters said.
    Underwriters expect to price about 2.3 billion dlrs of new
debt issues this week, including an asset-backed debt deal.
    "Treasurers have been sitting on the sidelines for weeks,
waiting to pounce," said an underwriter with a large Wall
Street house. "They will hit the market at a fast pace as long
as the dollar remains stable."
    "The financing calendar is the heaviest it has been in
weeks," said a trader with a small securities firm.
    "And there are billions of dollars on the SEC shelf that
can come to market at any time," he said, referring to company
debt filings with the Securities and Exchange Commission.
    Investment bankers said last week signaled a surge in
financings. New debt offerings rose to nearly 2.8 billion dlrs
during the holiday-shortened week from 2.09 billion dlrs in the
previous week, they calculated.
    "And most of (last week's) issues were not even on the
calendar," an underwriter remarked.
    Analysts noted that in the past few months the fixed-income
markets became virtually obsessed with the dollar. The
currency's sharp drop ignited fears that foreign investors
would shun dollar-denominated debt vehicles.
    Also, many participants believed inflation would gather
momentum because of the dollar's fall. Inflation is the number
one enemy of fixed-rate investments, analysts explained.
    But the dollar's recovery last week calmed worries in the
Treasury and corporate bond markets over foreign investor
demand and inflation. The resulting decline in yields should
bring company treasurers to market, traders said.
    Underwriters are slated to bid competitively tomorrow for
250 mln dlrs of first mortgage bonds due 2017 of Georgia Power
Co, a unit of Southern Co <SO>. The issue is rated Baa-1 by
Moody's Investors and BBB-plus by Standard and Poor's.
    This would be Georgia Power's first bond issue in the U.S.
since August 1986 when it sold 250 mln dlrs of same-rated,
same-maturity 10 pct bonds yielding 250 basis points more than
comparable Treasury securities.
    Tomorrow will see another competitive. Syndicates will bid
for 100 mln dlrs of 30-year bonds rated A-1/A-plus of Virginia
Electric and Power Co, a unit of Dominion Resources Inc <D>.
    Virginia Electric last visited the domestic debt market in
October 1986 when the utility issued 100 mln dlrs of
same-rated, same-maturity 9-1/4 pct bonds. The bonds were
priced to yield 9.27 pct, or 141 basis points over Treasuries.
    The biggest investment grade deal tentatively scheduled for
pricing this week is 600 mln dlrs of securities due 1992 backed
by the automobile loan receivables of Marine Midland Banks
<MM>. Salomon Brothers Inc will head the syndicate.
    The Marine Midland issue follows last week's offering of
230 mln dlrs of car loan backed debt by RepublicBank Dallas NA,
a unit of RepublicBank Corp <RPT>, underwriters noted.
    Goldman, Sachs and Co led the group for the RepublicBank
deal. First Boston Corp and Salomon Brothers, the most active
underwriters of asset-backed securities, were co-managers.
    First Boston has dominated the asset-backed market since
introducing the concept of selling these securities in March
1985. It has a commanding 86.1 pct share of the 12.5 billion
dlr market, according to figures tabluated by First Boston.
    Salomon Brothers is in second place with a market share of
8.8 pct, followed by Drexel Burnham Lambert Inc's share of 3.5
pct of the market. Goldman Sachs is next with a 1.6 pct market
share that was calculated before the RepublicBank Dallas deal.
    Indeed, investment bankers say that banks will be the most
frequent issuers of asset-backed securities this year. The
finance arms of the U.S. automakers accounted for the bulk of
last year's offerings, with General Motors Corp's <GM> General
Motors Acceptance Corp taking the lion's share of that.
    The Marine Midland cars deal is rated a top-flight AAA by
both Moody's and Standard and Poor's because it is backed by a
letter of credit by Union Bank of Switzerland.
    Recently, Imperial Savings and Loan Association of San
Diego filed a registration statement with the SEC covering 100
mln dlrs of credit card backed debt, underwriters noted.
 Reuter
