At least two big deals are expected this week: a Republic of Italy issue totaling up to $5 billion, and a $700 million offering by Pacific Gas and Electric Co.

The roadshow for Italy's 10-year U.S. dollar global bond deal ends tomorrow, and, depending on market conditions, the issue should reach the market this week, a source familiar with offering said.

Salomon Brothers Inc. and Goldman, Sachs & Co. are co-leads on the offering.

"It is a pretty high-quality deal, so I think there should be interest, but it depends where they price it," said Jim Ho, a senior vice president at Boston-based John Hancock Mutual Funds.

Pacific Gas & Electric's two-part offering is expected to be priced today. Price talk calls for the $350 million of 12-year bonds to yield 60 to 65 basis points more than comparable Treasuries. The bonds are noncallable for 10 years.

The 30-year piece was originally scheduled to mature in 35 years, a source familiar with the offering said. The adjustment was made "Just because the market is more receptive to a 30-year," the source said.

As for issues that have arrived already, slightly more than $5 billion of fresh debt was priced since the long bond's yield fell below 6% on Sept. 3, one market Watcher said.

While a that is a respectable tally, approximately one quarter of the figure is underwritten agency deals, the source said. The figure also includes the World Bank's $1.25 billion U.S. dollar global offering.

"I don't think anybody feels in a rush to take advantage of these rates," the source said. Treasurers do not feel under pressure because sufficient optimism exists regarding the direction of interest rates, he said.

In addition, if treasurers miss the low point in rates, it is not such a costly mistake considering how low rates are now, the source said.

"I think people expect a big week with rates down," one high-grade trader added. "But I've not seen it yet.

An analyst, however, said that will soon change.

"I understand that there is a tremendous amount of issuance coming in the next couple a weeks," the analyst said.

She added that the relative lag is just a holdover from the Labor Day vacation period.

"I think everybody gets back to work on Monday," she said. Of the names in the pipeline, only 20% to one-third are utilities, the analyst said.

"So a lot of industrial names are coming," she said.

In secondary trading Friday, spreads to Treasuries were unchanged and volume was light. The Labor Department's announcement of a 0.6% drop in August's Producer Price Index lifted Treasuries more than a point in the long end. Forecasts called for a 0.2% rise.

High-yield bonds lost anywhere from 1/4 point to a point.

New Issues

Federal Home Loan Mortgage Corp. issued $200 million of 4.75% notes due 1998 at par. Noncallable for three years, the notes were priced to yield nine basis points more than comparable Treasuries. Merrill Lynch & Co. was sole manager.

Federal National Mortgage Association issued $200 million of 5.875% notes due 2003 at par. Noncallable for three years, the notes were priced to yield 50 basis points more than comparable Treasuries. Salomon Brothers was sole manager on the offering.

Harsco Corp. issued $150 million of 6% notes due 2003. The noncallable notes were priced at 99.313 to yield 6.093 or 80 basis points more than comparable Treasuries. Moody's Investors Service rates the offering Baa1, while Standard & Poor's Corporates it A. J.P. Morgan Securities inc. was lead manager.

Campbell Soup issued $100 million of 5.625% notes due 2003. Noncallable for seven years, the notes were priced at 99.531 to yield 5.687% or 42 basis points more than 10-year Treasuries. Moody's rates the offering AA2. while Standard & Poor's rates it AA. Goldman, Sachs & Co. was lead manager on the offering.

Rating News

Duff & Phelps Credit Rating Co. has cut IBM Corp.'s senior debt to A from AA-minus, and removed the company from Rating Watch.

IBM was placed on Rating Watch Dec. 16. The rating agency has also given initial ratings of Duff 1 to IBM's commercial paper and A-minus to its preferred stock. The rating agency also assigned a Duff 1 to the commercial paper and A to the senior long-term debt of IBM affiliates.

"The ratings reflect the substantial changes occurring at IBM as well as the dynamics of the computer industry," a Duff & Phelps release says. "Although the substantial restructuring charges taken in 1992 and 1993 will ultimately result in considerable cost savings, significant cash outflow will occur the remainder of this year and in 1994."

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