More than $3 billion of fresh debt pelted the corporate bond market yesterday, led by IBM Corp.'s $1.8 billion issue.

Joe Mullally, a vice president and fixed-income strategist at First Boston Corp., attributed the deluge to a move by corporate treasurers to get in ahead of Friday's May producer price index report.

Market participants say they think that if the inflation news is bad, the Federal Reserve will boost short-term rates, which would mean higher borrowing costs for corporations. Mullally also cited issuers' desire to get deals done by the end of the quarter. By late yesterday, new issues totaled $3.15 billion. According to Securities Data Co., new issues last surpassed the $3 billion mark on March 24 with $3.197 billion.

IBM's two-part offering was increased from $1.5 billion. The first tranche consisted of $1.25 billion of 6.375% notes due 2000. The noncallable notes were priced at 99.693 to yield 6.43%, or 70 basis points over comparable Treasuries. The tranche was increased from $1 billion.

The second piece consisted of $550 million of 7.57% debentures due 2013. The noncallable notes were priced at 99.284 to yield 7.57%, or 65 basis points over 30-year Treasuries. Moody's Investors Service rates the offering A1, while Standard & Poor's Corp. rates it AA-minus. Morgan Stanley & Co. was the lead manager for the offering.

"I think it's good value vis-a-vis where it is in the market," Barbara Kenworthy, a portfolio manager at Dreyfus Corp., said of IBM's deal. "I think people got too bearish on where the ratings were going."

Some in the market believe IBM could be downgraded to a triple-B, though Kenworthy is not of that school. She says the credit should settle in the single-A area.

As for some of the rest of yesterday's deals, Kenworthy said Dayton Hudson's $200 million offering was "fair," News America Holdings' $100 million offering was "okay," Virginia Electric and Power Co.'s $200 million deal was "tight," and Salomon Inc.'s $150 million offering was "slightly tight."

In other news, growing belief that a transaction between GPA Group PLC and GECC will close has lifted GPA's bonds in recent days, said Max Holmes, director of distressed company research at Salomon Brothers Inc.

The company's 8 3/4% debt of 1998, at $500 million its most liquid issue, was trading at 52 cents on the dollar last Thursday and rose to as high as 61 cents yesterday, Holmes said.

In a report Monday entitled "GPA Group plc - Flying Again," Salomon calls GPA bonds "attractive" at current levels. Holmes said he believes the deal is "likely" to close.

As part of the transaction, GECC would "acquire" 45 Stage Ill aircraft from GPA's various affiliates and subsidiaries for $1.35 billion. However, the Salomon report says that while a company release uses the word "acquire." the transaction more closely resembles a "nonrecourse securitized financing, with GECC and GPA sharing in the equity residual of the aircraft."

In secondary trading, spreads on high-grade issues tightened, while high-grade issues gained 1/4 point.

BellSouth Telecommunications issued a two-part offering totaling $500 million. The first tranche consisted of $200 million of 6.375% notes due 2004. The noncallable notes were priced at 99.189 to yield 6.479%, or 42 basis points over 10-year Treasuries.

New Issues

The second tranche consisted of $300 million of 7.5% debentures due 2033. Noncallable for 10 years, the notes were priced at 99.623 to yield 7.53%. or 65 basis points over 30-year Treasuries. Moody's and Standard & Poor's rate the offering triple-A. Goldman, Sachs & Co. was the lead manager for the deal, which was increased from $400 million.

Virginia Electric and Power Co. issued $200 million of 7.50% first and refunding mortgage bonds due 2023. Noncallable for 10 years, the bonds were priced at 98.82 to yield 7.60%, or 71 basis points over comparable Treasuries. Moody's rates the offering A2. while Standard & Poor's rates it A. Goldman Sachs was the lead manager.

Dayton Hudson issued $200 million of 7.875% debentures due 2023. Noncallable for 10 years, the debentures were priced at 99.226 to yield 7.943%, or 105 basis points over comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A. Goldman Sachs was the lead manager.

First Chicago Corp. issued $200 million of 6.875% subordinated notes due 2003. The noncallable notes were priced at 99.75 to yield 6.91 %, or 84 basis points over comparable Treasuries. Moody's rates the offering Baa2, while Standard & Poor's rates it A-minus. Salomon Brothers was the lead manager.

Salomon Inc. issued $150 million of 7% notes due 2003. The noncallable notes were priced at 99.568 to yield 7.061%, or 100 basts points over comparable Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. Salomon Brothers was the lead manager.

News America Holdings issued $100 million of 7.45% notes due 2000 at par. The noncallable notes were priced to yield 7.45%, or 176 basis points over comparable Treasuries. Moody's rates the offering Ba2, while Standard & Poor's rates it BBB-minus. Citicorp Securities Markets Inc. was the sole manager.

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