Poor Market Conditions Delay More Junk Bond Sales

NEW YORK —  Worsening problems in the high-yield, high-risk bond market, where prices have fallen steeply on worries of debt repayment in highly leveraged buyouts, have forced companies to put off sales of new junk bonds.

At least four junk bonds issues totaling $1.68 billion have been postponed this week because of poor market conditions, including a $1.1-billion offer from Grand Union Co. and a $156-million deal by Ethan Allen Inc., analysts and underwriters said.

The other delayed offerings are a $150-million issue for Texas Air Corp. unit Continental Airlines and a $220-million deal for York International that had tentatively been set for this week, one analyst said.

“The junk bond market probably will be extremely quiet for the remainder of the year,” said Bob Lupo, a vice president of Smith Barney, Harris Upham & Co.

The market has been jittery since this summer, after several large companies that issued bonds to finance leveraged buyouts or restructurings had problems meeting interest payments in a slowing economy.

At the beginning of this quarter, expected junk bond sales totaled $11 billion, said King Penniman, a senior vice president of McCarthy Crisanti & Maffei. He noted that the calendar is now about half that, mostly because of delayed, postponed or canceled issues.

Penniman added that he doubted whether a pending $1.6-billion offering for West Point Acquisition Corp. and a $200-million deal for Best Products will come to market soon.

Some companies that had problems meeting interest payments included Integrated Resources Inc., Zapata Corp. and Seamans Furniture Corp.

Last month, Campeau Corp., the largest North American department store operator, said it would undergo a major restructuring and would miss interest payments on debt of its Allied Stores unit. Campeau took over Allied and Federated Department Stores with a large amount of junk bonds but has run into severe problems meeting debt payments.