"Over the last week, prices have plateaued somewhat," said Jack Utter, the manager of the high-yield portfolio at IDS Investor Services in Minneapolis.

Over the last year, owners of junk bonds have been rocked by one negative development after another, from defaults by big-name issuers like the Campeau Corporation to the Government-mandated liquidation of high-yield portfolios held by savings and loan associations.

In part, traders said the market did not react to the news because Calpers, as the pension fund is called, was known to have a large number of healthy names in its high-yield portfolio, issues that are currently in strong demand.

The Office of Thrift Supervision noted that Columbia might be seized by Federal regulators because huge losses from the high-yield portfolio had depleted its capital.

"We are also encouraged by the wide interest in the high-yield portfolio that First Boston has received so far, and have a greater degree of confidence that a favorable transaction can occur," Mr. Harshfield said.

The Government inherited the high-yield portfolio from failed savings and loans institutions.

In 1992, Lion entered into a more formal arrangement to manage the $3 billion high-yield portfolio for Credit Lyonnais which together with a consortium of other international investors provided the capital for Lion's investment activities.

Among the institutions for which Mr. Solomon managed a high-yield portfolio was the Finsbury Fund, an offshore fund that had been underwritten by a Drexel affiliate.

We have also been encouraged by the response our financial adviser, First Boston, has received with respect to the potential sale of our entire high-yield portfolio.

Fears that Columbia Savings might choose to dump its entire high-yield portfolio onto the market sent shivers through the junk bond market.