In Brief : RJR Buyout Gets Strong Response

Drexel Burnham Lambert Inc. said today that because of strong demand, it has increased to $5 billion its placement of high-yield bonds to finance Kohlberg Kravis Roberts & Co.’s $25-billion buyout of RJR Nabisco Inc.

The placement, raised from $3 billion, is part of the financing for Kohlberg Kravis’ buyout of the tobacco and food company in the largest corporate takeover in history.

“Investor response was good,” a Drexel spokesman said. He said U.S. and international investors made commitments to buy more than $5 billion of the bonds. Wall Street sources said last week that the placement was attracting heavy interest and appeared oversubscribed.

“This was an attractive deal. It sold itself,” said a portfolio manager of a “junk” bond fund. He said he contacted a salesman for Drexel last week and asked to buy bonds.

“RJR is a major American corporation,” the portfolio manager added. “It looks like the buyout was done at the maximum price possible, but at a feasible level. There is a reasonable prospect that in two years RJR will be able to pay down debt,” he said, adding that a recession would not significantly hurt RJR Nabisco.