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Corporate bonds

post gains

NEW YORK: US high-grade corporate bonds posted gains for the day as US Treasuries rallied on technicals and short-covering, dealers said on Monday.

Yield spreads on Bell Atlantic Corp on Monday and NYNEX Corp paper remained unchanged despite news of a definitive merger agreement between the two firms. Such an agreement had been greatly anticipated by industry experts and Wall Street.

High-grade dealers said the merger was no surprise and was already factored into the price of the firms' outstanding debt. The union will create the second-largest US telecommunications company behind AT&T Corp.

Moody's Investors Service Inc affirmed its ratings on the $13.3 billion of long-and short-term debt outstanding of both companies, but did revise its outlook.

The long-term debt outlook for Bell Atlantic was changed to negative from stable and the long-and short-term debt outlooks for NYNEX were changed to positive from stable.

Bell Atlantic Corp's senior unsecured debt is rated A1 by Moody's and has a senior implied rating of A-plus by Standard & Poor's NYNEX Corp's senior unsecured debt is rated A3 by Moody's and A-minus by S&P.

Overall, spreads to US Treasuries remained unchanged across most maturities in extremely light volume as the spotlight fell on the new issue market, traders said.

New issue activity capitalized on a dip in yields to push back-logged issues out to market.

Norwest Corp priced $300 million in Aa3/AA-minus three-year medium-term notes to yield 6.258 or 23 basis points over the comparable Treasury.

Transportadora de Gas del Sur of Argentina issued $150 million in B1/BB-minus five-year senior notes to yield 10.267 percent or 400 basis points over the comparable Treasury.

Advanta Corp issued $200 million in Baa3/BBB-minus medium-term five-year notes to yield 7.00 percent or 75 basis points over the comparable Treasury.

Air Products $ Chemicals Inc issued $125 million in A2/single-A 20-year bonds to yield 7.362 percent or 54 basis points over the old 30-year bond.

Later this week, Travelers (TRV.N)/Aetna(AET.N) Casualty Corp and Lockheed Martin Corp (LMT.N) are expected to price about $1.0 billion each in debt, syndicate sources said.

In the junk bond market, prices closed mostly unchanged in extremely quiet trade.

In the government market, the benchmark 30-year long bond closed up 15/32 at 90-14/32 to yield 6.75 percent.-Reuter