September employment figures brightened prospects for high-quality corporate bonds, but also revealed a Grincn that could dampen Christmas for some credits.

"This report reduced interest rate risk, but slightly increased credit risk," said John Lonski, senior economist at Moody's Investors Service.

Friday's figures showed continued sluggish economic growth and inflation in check, both positives for the fixed-income market, Lonski said.

But the report also shows a 0.9% decline in average weekly wages for September, Lonski said.

Lower wages will probably translate into a drop in consumer spending that could make for a disappointing Christmas shopping season, Lonski said, noting that he expects this year's season to be no better than last.

"I would not be surprised if some major retailers incurred year-to-year declines in terms of same-store sales," Lonski said.

The result could be increased repayment risks for issues of lower-tier investment grade and speculative grade companies, especially those with considerable exposure to consumer spending, he said.

"It certainly doesn't sound out of line," said Rosemary Sisson, a vice president in Salomon Brothers Inc.'s high-yield research group, of Lonski's assessment.

"I don't expect Christmas to be horrible, but I don't expect people to be jumping up and down and saying, ~We did great,'" Sisson said.

She also said that the 0.9% decline is a "significant drop."

Sisson said consumers will be heading to where they feel they can get the most value, places such as Sears, Roebuck and Co. and J.C. Penney Co.

Specialty stores will not fare as well, Sisson said.

Last season got a psychological lift because consumers thought the change of presidential administrations would improve the economy, Lonski said. They will not have that lift this year, he said.

Over all, the employment report signals that issuers have little to worry about when it comes to higher interest rates, Lonski said.

Rates are not going higher and corporate spreads are not going to be driven wider by stepped-up private sector borrowing, Lonski said. The weakness of the economy will deter businesses from adding on more debt, and that will keep spreads from widening, he said.

Business executives are treading carefully these days, Lonski said. "Nobody wants to be the first to repeat the business mistakes of the late 1980s," he said.

While September nonfarm payrolls rose 156,000, only 85,000 of those jobs were created in the private sector, Lonski said. And, of that 85,000, about half came from retailing, a sector where wages and benefits tend to be below average, he said.

It implies that inflation is still holding steady, and that all but rules out any tightening of [Federal Reserve] policy going into early 1994," Lonski said.

In other news, International Business Machines Corp. has registered with the Securities and Exchange Commission for $925 million of debt, bring its total available shelf debt to $1 billion, Rob Wilson, an IBM spokesman confirmed on Friday.

Wilson said the company made the filing on Thursday. It follows IBM's July 27 announcement that it had received approval from its board of directors to issue up to $1 billion of new debt.

Asked when the company planned to come to market, Wilson replied, "I can't speculate on that."

In secondary trading Friday, spreads on high-grade issues remained steady. Junk prices firmed slightly, except for Tiphook Finance Corp. bonds, which lost as much as 25 points after a Standard & Poor's Corp. downgrade late Thursday.

New Issues

BellSouth Telecommunications Inc. issued a two-part offering totaling $750 million. The first part consisted of $350 million of 5.875% debentures due 2009. The noncallable debentures were priced at 99.839 to yield 5.89% or 65 basis points more than 10-year Treasuries.

The second tranche consisted of $400 million of 6.75% debentures due 2033. Noncallable for 10 years, the debentures were priced at 98.50 to yield 6.86% or 78 basis points more than old 30-year Treasuries. Morgan Stanley & Co. was lead manager. Moody's and Standard & Poor's rate the offering triple-A.

Northwest Financial came to market with $150 million of 5.125% senior notes due 2000. The noncallable notes were priced at 99.40 to yield 5.235% or 42 basis points more than comparable Treasuries. Merrill Lynch & Co. was lead manager.

Chase Manhattan Corp. issued $100 million of 6.125% subordinated notes due 2008. The noncallable notes were priced at 98.602 to yield 6.27% or 102 basis points above 10-year Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it BBB-plus. Chase Securities managed the offering.

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