MCI Communications Corp. is planning to make the switch -- to $400 million of debt from an equal amount of preferred stock.

The company yesterday issued $400 million of 7.5% senior notes due 2004. The noncallable notes were priced at 99.69 to yield 7.54%, or 90 basis points over comparable Treasuries. Moody's Investors Service rates the offering Baal, while Standard & Poor's Corp. rates it BBB. Merrill Lynch & Co. lead managed the offering.

Proceeds will be used to redeem MCI's outstanding $400 million of increasing-rate cumulative preferred stock, according to MCI spokesman Jim Collins.

Low long-term interest rates encouraged MCI to consider an offering, Mr. Collins said.

"There's some good reasons for doing some financing like this at this time," he said in an interview before the offering was priced.

"It's right where they said it would be," one high-grade trader said of pricing shortly after the offering. The offering was priced in the afternoon and sold by 5 p.m.

In addition to assigning the issue its BBB rating, Standard & Poor's also affirmed the company's BBB senior debt, BBB-minus subordinated debt, and A-2 commercial paper, according to a Standard & Poor's release.

"The ratings reflect the positive trend in earnings and cash-flow parameters of credit quality, offset to some degree by aggressive use of debt leverage, an expectation that capital spending needs will continue to rise to accommodate growth, and intense competitive pressure in the long-distance market," Standard & Poor's release says.

The rating outlook is stable. In secondary trading, high-yield bond prices finished unchanged to up to 1/8 point. High-grades finished unchanged, traders said.

New Issues

Texas Utilities Electric Co. issued a three-part first mortgage bond offering totaling $500 million. The first tranche consisted of $175 million of 6.375% bonds due 1997.

The noncallable bonds were priced at 99.602 to yield 6.469% or 80 basis points over five-year Treasuries. The second consist of $150 million of 7.375% bonds due 2001. The noncallable bonds were priced at 99.279 to yield 7.486% or 100 basis points over interpolated seven and 10-year Treasuries.

The third tranche consists of $175 million of 8.5% bonds due 2024. Noncallable for 10 years, the bonds were priced at 99.599 to yield 8.536% or 108 basis points over current 30-year Treasuries. Goldman, Sachs & Co. lead managed the offering.

Boeing Co. issued $300 million of 7.950% bonds due 2024 at par. The noncallable bonds were priced to yield 50 basis points over current 30-year Treasuries. There is a par put in the 20th year. Moody's rates the offering Aa3, while Standard & Poor's rates it AA. First Boston lead managed the deal, which was increased from $250 million.

Continental Medical System Inc. issued $200 million of 10.875% senior subordinated notes due 2002. The notes were priced at 99.25 to yield to 11% or 66 basis points over comparable Treasuries. They are callable after five years at 104.1 moving to par in 2000. Moody's rates the offering B1, while Standard & Poor's rates it B-plus. Merrill Lynch lead managed the offering.

Western Resources issued $100 million of 7.25% first mortgage bonds due 2002. The noncallable bonds were priced at 99.90 to yield 7.264% or 62 basis points over when-issued 10-year Treasuries. Moody's rates the offering A3, while Standard & Poor's rates it A-minus. Dillon, Read & Co. sole managed the offering.

Virginia Electric & Power Co. issued $75 million of 6.25% first mortgage bonds due 1998. The noncallable bonds were priced at 99.311 to yield 6.390%, or 50 basis points over blended five- and seven-year Treasuries. Moody's rates the offering A2, while Standard & Poor's rates it A. A group led by Goldman, Sachs & Co. won competitive bidding to underwrite the offering.

West Penn Power issued $45 million of 7.375% first mortgage bonds due 2007. Noncallable for 10 years, the bonds were priced at 98.794 to yield 7.51%, or 90 basis points over 10-year Treasuries. Moody's rates the offering Aa3, while Standard & Corp. rates it A-plus. Goldman Sachs lead managed the offering.

Union Light issued $20 million of 6.50% first mortgage bonds due 1999. The noncallable bonds were priced at 98.685 to yield 6.739%, or 60 basis points over comparable Treasuries. Moody's rates the offer Baal, while Standard & Poor's rates it BBB-plus. Morgan Stanley & Co. won competitive bidding to underwrite the offering.

Yesterday's Ratings

Moody's has put Unibank A/S's Aa3 long-term debt and deposit ratings under review for a possible downgrade. The review follows the company's supervisory board's announcement that it will look for a new group chief executive from outside the organization.

"Moody's review process will evaluate the implications of this managerial change as well as examine the composition of the still-high loan loss provisions the institution is projecting," a Moody's release says. "The [unreadable] agency will review the [unreadable] effect this will have on Unibank [unreadable] earnings generation."

Moody's is not reviewing Unibank's Prime-1 commercial paper and short-term deposit obligations.

Fitch Investors Service has assigned an F-1 rating to Countrywide Funding Corp.'s $500 million commercial paper program and an A-minus rating to the company's medium-term note program.

"The ratings reflect the company's strong operating results, increased capital, and solid liquidity in a cyclical industry," a Fitch release says.

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