Salomon Bros. Buys Drexel Junk Bond Data

In a move to position itself as a leader in the high-yield bond market, Salomon Bros. Inc. said it bought Drexel Burnham Lambert’s software and computer database detailing Drexel’s near-fabled junk bond client base.

Drexel, the investment house that virtually created the junk bond market in the late 1970s but filed for bankruptcy protection this year, also would not reveal details of the transaction. But a Drexel spokesman said Salomon submitted the highest bid out of the 15 investment and commercial banks that were interested.

Drexel contacted 26 firms in an effort to sell the files, which contain information on more than 3,000 public and private high-yield securities. The software also gives traders on-line access to bond descriptions, price histories, financial data and research on the high-yield market.

“The addition of the database, along with our new people, dramatically improves our ability to make secondary markets and allows us to provide enhanced service to our investor clients,” Mark Field, managing director and head of Salomon’s junk bond sales department, said in a statement.

Over the past several months, Salomon also has hired several former Drexel executives, including Joseph Bencivenga, who was the firm’s head of high-yield research, and Don R. Mullen Jr., managing director of high-yield sales.

Although some traders maintain that Drexel’s computer system is “worth a fortune,” analysts said its value is somewhat questionable.

“Buying a database does not give you a personal relationship between a salesman and a customer,” said Doyle Lyons, securities analyst with Merrill Lynch Research in New York. “The market is in such turmoil right now, that if there is value in that network, I would think its payoff is long term.”

The junk bond market crashed late last year after several high-profile deals soured. There continues to be little buying and selling and very few new deals are hitting the market, Lyons added.

Still, Salomon’s purchase underscores the commitment many big New York-based investment houses now have to the disenfranchised market. Before Drexel’s bankruptcy filing, the firm dominated the junk bond market, boasting a near 60% market share at one point. Now that Drexel is out of the picture, other brokerage houses want to get in on the action.