High-grade corporate bond prices ended a sleepy session unchanged to 1/4 point higher yesterday as Rosh Hashanah thinned ranks, traders said.
"It's right before quarter's end, it's the Jewish holiday, and a Monday," one trader said.
"Maybe we're up a little bit with the government market, but we're not up tick for tick," another trader said.
A third trader pointed out that while the market's top tier was holding firm, some single-A and BBB credits were coming under pressure from a heavy new junk, calendar and rating agencies' actions.
Meanwhile, traders are awaiting Friday's release of September employment figures.
"I think this is a very important number it's the last number before the election," a high-grade trader said.
If the report reflects a decline in private-sector employment for the second straight month, the Federal Reserve "will probably ease with some gusto," John Lonski, senior economist at Moody's Investors Service, said Yesterday.
A decline could prompt the Fed to lower the discount rate and the federal funds rate 50 basis points, to 2.5%, Mr. Lonski said.
Lower interest rates will likely trigger an upsurge in new corporate issuance, primarily in the intermediate sector, he said.
In the high-yield market yesterday, better-quality names finished unchanged to slightly higher with some Fort Howard Corp. and News Corp. bonds showing particular improvement.
Distressed credits finished unchanged to down slightly.
In other news, Securities Data Co. preliminary figures show Merrill Lynch & Co. ahead in the 1992 straight debt underwriting race with $60.8 billion through the third quarter. That number is up from $37 billion through last year's third quarter, the financial information services firm said.
"The debt arena has long been Merrill Lynch's forte, and 1992 has certainly been no exception," a Securities Data release says. Final figures will be released tomorrow, the firm said.
Goldman, Sachs & Co. finished second with $40.3 billion, while Lehman Brothers finished third with $33.5 billion.
Overall, more than $236 billion of straight debt, excluding mortgage- and asset-backed issues, was raised in the first nine months of 1992, eclipsing the $200 billion full-year record set last year.
Securities Data called the junk bond's return the most "striking" characteristic of this year's debt market.
"Issuance in this area zoomed to $30.1 billion for the first nine months, and Michael Milken is still behind bars," the release says. At its current pace, the high-yield market will smash the 1986 record of $31.9 billion. That compares to $1.4 billion raised from 10 deals in 1990, Securities Data said.
Also yesterday, Clark Oil & Refining Corp. said it will redeem all of its outstanding 12 1/4% first mortgage fixed-rates notes due July 15, 1996.
The St. Louis-based company said it plans to redeem the notes on Oct. 26 at 106.12% plus accrued interest for a total of $1,095.57 for each $1,000 principal amount, according to a company release.
Clark's release says $104 million of the original $200 million issue remains outstanding. The Horsham Corp. owns 60% of Clark.
Asked what prompted the redemption, Dennis Eichholz, Clark Oil's treasurer, said, "Just economics, it's 12 1/4% debt."
Downgrades, prompted primarily by weakening credit quality among non-U.S. financial institutions, domestic utilities, and speculative-grade issuers, dominated third-quarter rating activity, Standard & Poor's said yesterday.
"However, the easing trend in corporate downgrades noted in the second quarter repeated itself among investment-grade industrial issuers," a Standard & Poor's release says.
The rating agency's preliminary data shows ratings on $53.1 billion of debt were lowered, compared to $6.2 billion of upgrades. Down-graded issuers totaled 93, while those upgraded totaled 42, Standard & Poor's said.
In the second quarter, the agency cut ratings on $93.9 billion of debt and raised ratings on $5.1 billion. Downgrades totaled 109, while upgrades totaled 73, the release says.