Election day kept the new-issue market on hold yesterday, with market participants expecting a mostly quiet week ahead.
No new corporate issues were priced as the market spent the day awaiting the results of the presidential election.
Traders said a Clinton victory was securely priced into the market, and that any other outcome would have a positive impact on prices.
Among the active issues in the secondary market were General Motors bonds.
Late Monday night. Standard & Poor's Corp. put the automaker and all of its related entities on Credit Watch with negative implications.
Traders said GM spreads were tightened about five basis points yesterday, while high-grades as a whole moved about point higher. High-yields rose about 3/8 point.
Standard & Poor's said GM's recent management shake-up, which included replacing the chairman of the board and the chief executive officer, "points to the inadequacy of previous plans for improving the competitiveness of GM's core North American automotive operations and raises the specter that costly and potentially disruptive additional restructuring measures will be necessary.
As part of its restructuring, GM named John F. Smith Jr., former head of the company's European operations, as chief executive officer. Procter & Gamble Chairman John G. Smale was named to replace Robert C. Stemple as chairman.
The rating agency, which rates GM's senior debt A-minus, also said that GM's announced dividend cut will "make it harder for the company to continue issuing large amounts of equity to stem erosion of the equity base."
A spokesman for GM said yesterday that the company is disappointed by Standard & Poor's assessment "in light of the very positive actions that were taken Monday by the board of directors, which can only speed the return to profitability of our North American operations and of General Motors as a whole."
The spokesman said GM officials will meet with the rating agency to discuss the restructuring plans in more detail.
Also affected by the Credit Watch action were General Motors Acceptance Corp., whose senior debt is rated A-minus; GM Hughes Electronics Corp., whose senior debt also stands at A-minus; and Electronic Data Systems Corp., whose commercial paper is rated A-minus.
About $86.2 billion in outstanding debt is affected.
Other Rating Actions
In other rating agency action yesterday, Moody's Investors Service announced it is considering a downgrade for CIGNA Corp. and its property and casualty and life insurance subsidiaries.
About $975 million of long-term debt would be-affected if the agency lowers the rating. Moody's rates CIGNA's senior debt Al.
The rating agency said CIGNA's exposure to insurance losses from uncollectible reinsurance, in addition to third-quarter charges the company recently announced, led to yesterday's announcement.
Standard & Poor's also lowered its ratings on $2.6 billion of Pennzoil debt.
The agency's A-minus rating on senior debt moved to BBB, and commercial paper dropped to A2 from Al.