Yesterday's three-part preview of what to expect from today's September employment report lifted bond prices and lured corporate issuers to market, one economist said.
With yesterday's economic news foreshadowing weak employment data and a resultant credit easing, corporate issuers were apparently trying to get in ahead of big supply likely to follow today and next week, John Lonski, senior economist at Moody's Investors Service, said yesterday.
"Get in ahead of the crowd and you can get a better seat," Mr. Lonski said.
Weekly jobless claims, the September Purchasing Managers' Index, and August construction spending all indicate economic weakness, he said.
Mr. Lonski also noted that the U.S. dollar was holding up well against foreign currency, making a Fed ease even more likely. If the Fed eases, the German and Japanese central banks may also ease credit policy to prevent a run on the dollar, he said.
Jobless claims for the week of Sept. 19 rose to 429,000 from 414,000 the previous week. The September purchasing managers index fell to 49% from 53.7% in August, and August construction spending fell 0.8%.
In other news yesterday, IDD Information Services reported that Merrill Lynch & Co. ranks number one among the top 15 managers of underwritten corporate debt for the period from Jan. 1 to Sept. 30. Merrill Lynch underwrote 379 issues totaling close to $60.4 billion for a 24.9% market share.
IDD's corporate debt figures include agency issues, a spokeswoman for the firm said.
Goldman, Sachs & Co. underwrote 251 new deals totaling $41.5 billion for a 17.1% market share to finish second. Lehman Brothers came in third, with 188 offerings totaling close to $33.9 billion for 14% of the market.
The firms duplicated last year's finishing order for the same period, but all showed significantly improved performance. For instance, Merrill Lynch underwrote only 257 issues from Jan. 1, 1991, to Sept. 30, 1991, for a total of close to $39.4 billion and a 26.1% market share.
In junk bonds, Merrill Lynch again emerged victorious, with 23 issues totaling close to $5.4 billion for an 18% market share.
Goldman Sachs followed with 24 issues totaling close to $4.9 billion for a 16.4% market share. First Boston Corp. finished third, with 24 issues totaling close to $3.9 billion for a 12.9% market share.
Those firms also duplicated last year's finishing order and improved performances. For the same period in 1991, for example, Merrill Lynch underwrote six deals totaling close to $2.3 billion for a 66% share of the market.
In secondary trading, high-grade bond prices climbed almost a point in the 10-year sector, with buyers coming in to cover short positions ahead of tomorrow's employment number, one trader said. Spreads, which had been widening of late, "actually tightened a little bit," he said. High-yield bonds ended 1/4 to 3/8 point higher, a high-yield trader said.
New Issues
Tenneco Inc. issued $500 million of 7.875% notes due 2002. The noncallable notes were priced at 99.419 to yield 7.96% or 165 basis points over comparable Treasuries. Moody's Investors Service rates the offering Baa2, while Standard & Poor's Corp. rates it BBB-minus. Morgan Stanley & Co. lead-managed the offering.
Northern Telecom issued $300 million of 6.875% notes due 2002 at par. The noncallable notes were priced to yield 65 basis points over comparable Treasuries. Moody's rates the offering Aa3, while Standard & Poor's rates it A-plus. Goldman, Sachs & Co. lead-managed the offering.
Avco financial Services Inc. issued $200 million of 5.875% senior notes due 1997. The noncallable notes were priced at 99.722 to yield 5.94% or 73 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. Merrill Lynch managed the offering.
James River Corp. issued $200 million of 6.750% notes due 1999. The noncallable debt was priced at 99.752 to yield 6.80% or 100 basis points over when-issued seven-year Treasuries. Moody's rates the offering Baal, while Standard & Poor's rates it BBB-plus. Salomon Brothers Inc. lead-managed the offering.
May Department Stores issued $200 million of 8.375% debentures due 2022. Noncallable for 10 years, the debentures were priced at 99.713 to yield 8.401% or 110 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. Morgan Stanley was lead manager. The offering was increased from $150 million.
Federal Home Loan Banks issued $200 million of 3.7% step-up notes due 1995 at par. The notes are noncallable for a year, after which the notes' coupon increases to 4.70%. Goldman Sachs lead-managed the offering.
New York State Electric & Gas issued $150 million of 6.750% first mortgage bonds due 2002. The noncallable bonds were priced at 98.026 yield 7.028% or 74 basis points over comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it BBB-plus. Merrill Lynch lead-managed the offering.
Comerica issued $150 million of 7.250% subordinated notes due 2002. The noncallable notes were priced at 99.598 to yield 7.307% or 104 basis points over comparable Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A-minus. Lehman Brothers lead-managed the offering.
Armco Inc. issued $100 million of 11.375% senior notes due 1999 at par. Noncallable for five years, the debentures were rated B1 by Moody's and BB-minus by Standard & Poor's. Salomon Brothers lead-managed the offering.
Owens-Illinois Inc. issued $100 million of 9.95% debentures due 2022. Noncallable for 10 years, the bonds were priced at 99.775 to yield 90 basis points over comparable Treasuries. Moody's rates the offering Aa2, while Standard & Poor's rates it AA-plus. Donaldson, Lufkin & Jenrette Securities Corp. sole-managed the offering.
Plains Resources issued $100 million of 12% senior subordinated notes due 1999 at par. Noncallable for three years, the notes were rated B3 by Moody's and B-minus by Standard & Poor's. Jefferies & Co. lead managed the offering.
