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Corporate bonds surge

in subdued mood

NEW YORK: US high-grade corporate bonds closed higher on Friday in line with US Treasuries on light activity as the week ended on a calm note, dealers said.

Yield spreads to Treasuries held firm on most issues as a derth of market moving economic and thin company news left volume light.

TCJ Communications lost some ground Friday as a follow through from Thursday's sell-off. TCJ 8.0 percent debt, due 2005, widened two basis points on Friday having slipped some 25 basis points on Thursday following news Standard & Poor's said TCJ's outlook was negative. The primary market saw just one new deal on Friday.

Apache Corp issued $180 million in 30-year debentures, said lead manager Goldman Sachs & Co.

The debentures have a 7.95 percent coupon and were priced to yield 114 basis points over comparable Treasuries. Non-callable for life, the debt is rated Baa3/BBB.

The deal was pre-marketed with price talk of 125 to 120 basis points but came in tighter at 114 basis points following oversubscription, dealers said. The deal was seen as fairly priced given that Apache's outstanding 30-year issue trades in the 115 basis points range, dealers added.

Quebec debt traded tighter again on Friday, traders said. Quebec 30-year debt outperformed US Treasuries by about five basis points this week as traders said investors were more upbeat lately about the political situation in the Canadian province.

Dealers noted that Quebec 30-year paper now trades tighter that comparable Italy debt adding that Quebec and Italy have traded in tandem in recent months.

Junk bonds also saw light activity gaining a quarter to a half point, traders said. Harrah's Jazz was the biggest mover taking another drop in the wrong direction.

Harrah's fell 5-1/2 points to a 44 bid and a 47 offer on Friday following concerns the troubled casino may face lengthy litigation, MCM CorporateWatch said. Elsewhere activity was muted.

In the governments market the 30-year long-bond closed 17/32 higher at 89-31/32 to yield 6.79 percent.-Reuter