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Corporate bonds

close lower with

Treasuries

NEW YORK: US high-grade corporate bonds closed lower in sympathy with a sell-off in US Treasuries on stronger-than-expected March US jobs data.

Labour Department's report of a 140,000 increase in March non-farm payrolls pushed the yield on the 30-year US T-bond to 6.83 percent, the highest since Aug 23, 1995.

The benchmark 30-year bond fell 1-1/2 points initially on the data, and subsequently posted a loss of two points.

"The focus today was on the Treasury market, corporate secondary trading was very light," said one high-grade trader.

Spreads over US Treasuries were unchanged across most corporate maturities in light holiday volume.

Thin staffs, an shortened session in observance of Good Friday, and the strong payrolls report suppressed activity in the corporate sector, dealers said.

"I don't think there was a single trade today," another high-grade trader said.

February non-farm payroll jobs were revised to reflect an increase of 624,000 versus the stunning 705,000 reported last month.

March unemployment was 5.6 percent, up from February's tally of 5.5 percent. This was in line with expectations.

"The (payrolls) number is negative for the bond market in the sense that it points toward improvement for the labour sector," said Marilyn Schaja, economist at Donaldson, Lufkin & Jenrette. "The three-month average, when everything is taken into account, is about 200,000 for employment growth."

In the corporate primary sector, market players sat out the day as US Treasury yields climbed higher, making it more expensive for issuers to finance their debt.

"The market will remain relatively quiet, some issuers may potentially tap the new issue market during rallies, however, that's probably going to be it," said one syndicate official.

Dealers added that with European markets closed Monday for Easter holiday, activity should remain light.

"It's probably not going to be until Tuesday, before the markets get a full international trading period," said a dealer.

In the week ahead, a few high-yield issues are expected to price, dealers said.

Trump Atlantic City Associates and Trump Atlantic City Funding are expected to issue $1.1 billion in 10-year first mortgage notes via Donaldson, Lufkin & Jenrette Securities. Price talk is 10.75 to 11.0 percent, syndicate sources said.

Continental Homes Holding is expected to issue $150 million 10-year senior notes via Smith Barney.

A little more than $1.5 billion in new corporate debt was priced this week, including $600 million of junk deals.

In the governments market, the benchmark US 30-year long closed down 1-27/32 at 89-15/32 to yield 6.83 percent versus 6.67 percent at Thursday's close.-Reuter