Argentina's upcoming $750 million global bond deal should be well received, a Buenos Aires bank source said, noting the country's hard work in the past two years to "get its financial house in order."

While the South American country has defaulted on debt in the past, "for Argentina to default on this would be a total disaster," John West, a member of Banco Finansur's capital markets division, said in a telephone interview yesterday. West said he thinks a default is unlikely.

He noted that the global bonds, which market sources expect to be priced before yearend, will be listed on three- stock exchanges, which he said is a first for the republic. "Because they are being listed in three different areas, the chance of these defaulting is very slim," West said.

A market maker in all Argentine debt, Banco Finansur trades more than $100 million of Argentine debt each day, West said.

According to a preliminary prospectus on the offering, the bonds will be listed on the Luxembourg Stock Exchange, the Buenos Aires Stock Exchange, and The Stock Exchange Hong Kong Limited. Merrill Lynch & Co., Salomon Brothers Inc., and Banco Rio de la Plata will underwrite the deal, the preliminary prospectus says.

The bonds will be sold in the United States, Europe, Asia, and Argentina, the document says.

"We think it's going to be received very favorably," West said.

"Inflation has come down significantly this year," he said. He expects the rate for 1993 to come in at about 11%. The government also has a budget surplus, he said.

Palomba Weingarten, chairman and chief executive officer of the Pilgrim Group in Los Angeles also cited rapidly declining inflation."

Pilgrim has $3 billion under management in 19 mutual funds, including its new Pilgrim All-Americas Government Income Trust. A maximum of 10% of the fund is invested in Argentine Government securities.

"We are very bullish on Argentina," Weingarten said.

Elsewhere yesterday, Rep. Henry B. Gonzalez, chairman of the House Banking Committee's subcommittee on housing and community development, expressed concern over secured investor trusts, also known as kitchen sink bonds."

"These bonds are troubling because they are so complex that it is difficult to determine their actual stability and profitability," Gonzalez in said in a release issued by the House Committee on Banking, Finance and Urban Affairs.

"Although rating agencies give these bonds triple-A ratings, these ratings do not indicate the underlying assets' safety," Gonzalez said in the release.

The release cites a Nov. 18 Wall Street Journal article that says the Federal Home Loan Mortgage Corp. was considering a kitchen sink bond issue. The article describes the securities as bonds "issued by trusts into which Wall Street dumps bits and pieces of capricious, hard-to-value mortgage-backed securities."

Gonzalez raised concerns over such a Freddie Mac issue at a housing subcommittee hearing the next day. In response to questions, the release says Leland C. Brendsel, Freddie Mac's chairman of the board and chief executive officer, denied that the agency was contemplating such an issue.

"While this was encouraging, it is only part of the solution," Gonzalez said in the release. "Apparently not everyone has bowed out of the ~kitchen sink bond business.' According to The Wall Street Journal, the trusts issuing these bonds 'contain pieces of dozens of mortgage deals -- some privately placed -- from as many as a dozen underwriters.' ~Kitchen bonds' is a growing field and one that I plan to monitor closely."

In secondary trading, spreads on high-grade issues ended unchanged in light trading. High-yield bonds were down slightly in thin trading.

"It's going to be light all week basically," one trader said.

Federal Home Loan Banks issued $100 million of floating rate notes due 1998 at par. The noncallable notes float monthly at 10 basis points over the cost of funds index and pay quarterly. Merrill Lynch & Co. was the sole manager.

Federal Home Loan Banks issued $56 million of 5.24% medium-term notes due 1998 at par. The noncallable bonds were priced to yield six basis over comparable Treasuries. Lehman Brothers was the sole manager.

Federal Home Loan Banks issued $28 million of medium-term notes due 1996 at par. The noncallable notes were priced to yield three basis points over comparable Treasuries. Dean Witter Reynolds Inc. was the sole manager.

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