960424

Corporate bonds

end off, new

issues abound

NEW YORK: US high-grade corporate bonds tracked US Treasuries to close off, near session lows, in dull secondary trade as new supply flooded the market.

Travelers/Aetna Property Casualty Corp, a unit of Travelers Group Inc, issued a much anticipated $700 million in notes and bonds following its 35.4 million initial public offering Monday.

The first tranche was $500 million in five-year notes priced 45 basis points over comparable US Treasuries.

The second tranche was $200 million in 30-year bonds priced 92 basis points over comparable US Treasuries.

Both tranches were non-callable for life, and rated A2 by Moody's Investors Service Inc and single-A by Standard and Poor's.

The insurer still has $600 million of trust preferred securities due 2036 waiting to price. Dealers quoted yield talk in the 8.125 to 8.25 percent area.

Shares in Monday's IPO went for 25.00 each and traded up 2.50 to 27.5 by Tuesday's close. The deal was the largest insurance equity offering since Allstate Corp went public in June 1993.

Meanwhile, Bear Stearns issued $225 million in A2/A rated five-year notes to yield 53 basis points over the five-year when-issued Treasury at 6.825 percent.

The deal was increased from an initial size of $200 million due to strong investor demand, market sources said.

China Light & Power Co Ltd priced $300 million in A3/single-A 10-year notes at 108 basis points over the 10-year Treasury to yield 7.593 percent.

Deposit Guaranty Corp priced $100 million in 10-year Baal/triple-B senior notes at a 82 basis points spread over the 10-year Treasury to yield 7.338 percent.

In junk bonds, priced $125 million of senior subordinated 144A notes rated B2/B at 98.47 to yield 10.50 percent. The debt traded up to 100.25 on the break.

Ferrellgas Partners LP set $160 million in senior notes at par to yield 9.375 percent. Dealers quoted the paper up at 101 on the break.

The new issue calendar is expected to remain full for the remainder of the week with Lockheed Martin Corp seen tapping the new market for about $1.0 billion in debt via Goldman Sachs & Co.

Junk bond prices were mostly unchanged in light trade, high-yield traders said.

Apple Computer debt held firm despite S&P slashing the computer maker's senior debt rating to B-plus from BB-minus and commercial paper to single-C from single-B.

Both ratings remain on watch with negative implications.

Dealers said the rating action was already factored into the outstanding bonds' prices.

In the governments market, the benchmark US 30-year long bond closed off 12/32 at 90-2/32 to yield 6.78 percent.-Reuter