960412

Corporate bonds

slightly lower

NEW YORK: US high-grade corporate bonds on Thursday wrapped up spotty afternoon trade slightly lower while in the junk market the Trump Atlantic City Associates $1.2 billion new issue stole the show.

The $1.2 billion in first mortgage notes traded up to a high of 100.75 after pricing at par in the late afternoon.

Demand for the paper in the secondary market was strong as the notes were priced a full quarter of a percent point in yield above the previously marketed range.

The paper carries a 11.25 percent coupon. Price talk early this week ranged from 10.5 to 11.0 percent.

However, sources close to the deal said that the yield spread to Treasuries was actually narrower at the time of pricing than from previous yield talk levels due to this week's heavy sell-off in Treasuries.

"We moved less (in yield than comparable Treasuries), but it was hard to ignore the Treasury market...the credit markets were very sloppy," the source said.

The offering, one of the largest junk bond deals of the nineties, was roughly three times oversubscribed. About 110 different institutions bought the paper including a number of cross over and first time buyers, the source said.

The new notes are not added supply but considered a refinancing of existing debt for the soon-to-be merged Trump Hotels & Casino Resorts Inc and Taj Mahal Holding.

On January 8, Trump Hotel signed a merger agreement to acquire the Trump Taj Mahal casino resort in Atlantic City.

Coinciding with the debt offering was a 12.5 million common share offering at $31.25 per share which market sources said was also a blow-out.

TVA launched a $500 million bond issue which is tailored to specific market ranging from individual investors to global institutional investors.

On the high-grade side, yield spreads to US Treasuries were unchanged across most maturities, except bank paper spreads which tightened one to two basis points, traders said.

JP Morgan paper traded up on strong first quarter earnings. The firm's 6.25 percent praper due 2005 was bid up at 53 basis points over comparable Treasuries, traders said.

The junk market closed up 1/4 to 1/2 of a point as for a second day casino paper received a boost from the strong demand for Trump deal.-Reuter